Question

Gabe opened an RRSP deposit account on December​ 1, 2008, with a deposit of $1000.

He added ​$1000 on May ​1, 2010, and ​$1000 on June ​1, 2012. How much is in his account on March ​1, 2016, if the deposit earns 6.9%

p.a. compounded monthly​?

Answer 1

The deposit of $1000 was invested at 3 different dates

see working notes

1st Deposit Dec 1, 2008 to March ​1, 2016 is a total 87 months (n) ; 2nd deposit of $1000 is from May ​1, 2010 to March ​1, 2016 which is 70months (n); 3rd deposit of $1000 is from June ​1, 2012 to March ​1, 2016 which is 45months (n)

Monthly rate or r is 6.9%/12 = 0.00575

Future Value formula is = Deposit amount * ((1+r)^n)

Substituting values in the formula

(1000 * ((1.00575)^87)) + (1000 * ((1.00575)^70)) +(1000 * ((1.00575)^45))

(1000 * 1.646772433) + (1000 * 1.493835882) +(1000 * 1.29435038)

1646.77 +1493.84 + 1294.35

$4434.96 will be in the account as on Mar 1, 2016

1st deposit 2nd deposit 3rd deposit Dec 1,2008 2009 2010 2011 2012 8 12 12 T 2013 2014 2015 1st Mar 2016