Question

Michelle invested $1,550 at the end of every 6 months into an RRSP for 16 years. For the first 8 years she earned interest at a rate of 4.80% compounded semi-annualy and for the next 8 years she earned interest at a rate of 6.40% compounded semi-annualy. a. Calculate the accumulated value of her investment after the first 8 years. $0.00 Round to the nearest cent b. Calculate the accumulated value of her investment at the end of 16 years. $0.00 Round to the nearest cent C. How much interest did she earn in her investment over the 16 years.

Answer 1

a. Accumulated value of her investments at end of  8 years will be:$30,520.64 (we are not considerin the deposit made at the end of 8th year)

b.Accumulated value of her investments at end of 16 years will be:$83,277.15 (we are not considerin the deposit made at the end of 16th year)

c. Her total investment over 16 years was = 32*1550 = $49,600

thus interest gained by her = 83277.15 - 49,600 = $33,677.15

Calculcation details for all parts

Time Period	0	0.5	1	1.5	2	2.5	3	3.5	4	4.5	5	5.5	6	6.5	7	7.5	8	8.5	9	9.5	10	10.5	11	11.5	12	12.5	13	13.5	14	14.5	15	15.5	16
Investment	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550	1550
Interest Rate	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	4.80%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%	6.40%
Multiplier	1.46150164	1.427248	1.393797	1.361129	1.329228	1.298074	1.267651	1.23794	1.208926	1.180592	1.152922	1.1259	1.099512	1.073742	1.048576	1.024	1.655294	1.603967	1.554232	1.506038	1.45934	1.414089	1.370241	1.327753	1.286582	1.246688	1.208031	1.170573	1.134276	1.099105	1.065024	1.032
8 year total	$ 30,520.64
16 year Total	$ 83,277.15
Total Investment	$ 49,600.00
Total Interest	$ 33,677.15