Question 8 of 10 Your RRSP savings of $45,000 are converted to a RRIF at 5.56%...

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Question 8 of 10 Your RRSP savings of $45,000 are converted to a RRIF at 5.56% compounded monthly that pays $5,182 at the beg

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Answer 1

Answer #1

Information provided:’

Present value= $45,000

Monthly payment= $5,182

Interest rate= 5.56%/12= 0.4633% per month

The question pertains to annuity due. Annuity due refers to the payment made at the beginning of a period.

This can be solved using a financial calculator by inputting the below into the calculator:

The financial calculator is set in the end mode. Annuity due is calculated by setting the calculator to the beginning mode (BGN). To do this, press 2^nd BGN 2^nd SET on the Texas BA II Plus calculator.

Enter the below in a financial calculator in BGN mode to compute the number of payments:

PV= -45,000

PMT= 5,142

I/Y= 0.4633

Press the CPT key and N to compute the number of payments.

The value obtained is 8.8421.

Therefore, the fund will be depleted after 8.8421 payments.

In case of any query, kindly comment on the solution

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Answer 2

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Question 8 of 10 Your RRSP savings of $45,000 are converted to a RRIF at 5.56%...

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