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Nicole has just turned 41 and has accumulated $24 500 in her RRSP. She makes month-end...

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Nicole has just turned 41 and has accumulated $24 500 in herRRSP. She makes month-end contributions of $400 to the plan andintends to do so until she retires at the age of 60. The RRSP willbe allowed to continue to accumulate until she reaches the age of65. If the RRSP earns 6% compounded monthly for the next 24 years,how much will her RRSP contain when she turns 65?

Answer & Explanation Solved by verified expert
4.3 Ratings (683 Votes)

Pv Current amount in RRSP $24,500
Rate Monthly interest rate=(6/12)% 0.50%
Nper Number of Months Savings tillshe retires 228 (60-41)*12
Pmt Monthly Savings $400
FV Future value of savings at age 60 $245,820.47 (Using FV function of excel with Rate=0.5%, Nper=228, Pmt=-400, Pv=-24500)
Excel Command: =FV(0.5%,228,-400,-24500)
Amount Accumulated at age 65
Pv1 Amount Accumulated at age 60 $245,820.47
Rate Monthly interest rate=(6/12)% 0.50%
Nper1 Number of months=5*12 60
FV1 Accumulated amount at age 65 $331,574.98 (Using FV function of excel with Rate=0.5%, Nper=60, Pv=-245820.47)
Excel Command:=FV(0.5%,60,,-245820.47)

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Transcribed Image Text

Nicole has just turned 41 and has accumulated $24 500 in herRRSP. She makes month-end contributions of $400 to the plan andintends to do so until she retires at the age of 60. The RRSP willbe allowed to continue to accumulate until she reaches the age of65. If the RRSP earns 6% compounded monthly for the next 24 years,how much will her RRSP contain when she turns 65?

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