Question

Liz deposited $600 at the end of every month into an RRSP for 8 years. The interest rate earned was 4.50% compounded semi-annually for the first 3 years and changed to 4.75% compounded monthly for the next 5 years. What was the accumulated value of the RRSP at the end of 8 years?

Round to the nearest cent

Answer 1

Son 100 Given: mitially rate (8) = 4.50%). - 4.50 -0.045. per annum for 3 years so n=3x12 » 36 months Amount deposited at the end of every month => $600 This means 12 times a year. So, rare (R), I no 36 years and 12 Recall the formular for future value at the end of 3 years! 1 & (I +r)^ - 1 PMI 600 => R r 12 1+ 0.0451 600 12 1 -> $.23079.65 0.04s oues 07045 After 3 years ; Ragna? 5x12= 60 year > 4.95% 0.047S Per annum for 5 years f V 23079.65 |(arteme tega toga -1 1 10:04 12 0.0475 12 FV => 29253.00962 + 40544.43 ->$69797.44732 i. The accumulated value (future value) at the end of 8 years is 169797.44