SOLUTION: Aisha contributed $ 2000 per year for the past 10 years into an RRSP account earning 3.8% compounded annually. Supposed she leaves the accumulated contributions for another five ye
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Question 1207355: Aisha contributed $ 2000 per year for the past 10 years into an RRSP account earning 3.8% compounded annually. Supposed she leaves the accumulated contributions for another five years in the RRSP at the same rate of interest. a. How much will Aisha have in total in her RRSP account? b. How much did Aisha contribute? c. How much interest will have been earned? Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! the calculator at https://arachnoid.com/finance/index.html can help solve this.
alternatively, my ti-business analyst 2 will do the same job.
there may be slight differences due to rounding, but the answers will essentially be the same.
i compared the two results and provided both if there was a difference.
there are also annuity formulas that will provide the same answer.
here are the results from using the calculator at arachnoid.com
the first thing to do is to find the future value of 2000 invested at the end of each year.
inputs are:
present value = 0
future value = 0
number of time periods = 10 years
payment is -2000.
interest rate per time period = 3.8% per year
payments are made at the end of each year.
click on fv and the calculator tells you that the future value is 23790.69.
the next thing to do is to finr the future value of 23790.69 for the additional 5 years.
inputs are:inputs are:
present value = -23790.69
future value = 0
number of time periods = 5 years
payment is 0.
interest rate per time period = 3.8% per year
payments are made at the beginning or end of each year doesn't apply.
click on fv and the calculator tells you that the future value is 28667.76.
that should be your answers.
2000 invested at the end of each year for 10 years, and then having the remaining balance invested for an additional 5 years with no additional investments at the end of each year, will will be worth 28667.76 at the end of the 15 year period.
answers to your questions are:
a. How much will Aisha have in total in her RRSP account?
28,667.76.
b. How much did Aisha contribute?
she contributed 10 * 2000 = 20,000
c. How much interest will have been earned?
her interest earned was 28,667.76 minus 20,000 = 8,667.76
