Asked by Marisol Trejo on May 13, 2024
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Charlene has made contributions of $3,000 to her RRSP at the end of every half year for the past seven years. The plan has earned 9% compounded semi-annually. She has just moved the funds to another plan earning 7.5% compounded quarterly, and will now contribute $2,000 at the end of every three months. What total amount will she have in the plan five years from now?
Compounded Semi-Annually
Interest calculation method where the interest is added to the principal at half-year intervals, leading to an increase in the amount of subsequent interest.
Compounded Quarterly
Refers to the process where interest is added to the principal amount four times a year at regular quarterly intervals.
RRSP
A Registered Retirement Savings Plan that allows Canadians to save for retirement on a tax-deferred basis.
- Ascertain the prospective value and earned interest on investments featuring periodic payments and interest compounding.
- Acquire knowledge on the effect of compound interest in determining the value of annuities, whether immediate or deferred.
Verified Answer
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Learning Objectives
- Ascertain the prospective value and earned interest on investments featuring periodic payments and interest compounding.
- Acquire knowledge on the effect of compound interest in determining the value of annuities, whether immediate or deferred.