Results 1 to 4 of 4

Thread: [MOVED] RRSP calc: value at end of 25 years

  1. #1
    New Member
    Join Date
    Nov 2007
    Location
    Van
    Posts
    33

    [MOVED] RRSP calc: value at end of 25 years

    How much larger will the value of an RRSP be at the end of 25 years if the contributor makes month-end contributions of $300 instead of year-end contributions of $3,600? In both cases the RRSP earns 6.8% compounded quarterly.

    REQUIRED:
    1. Month-end contributions.
    2. Year-end contributions.

  2. #2
    Elite Member stapel's Avatar
    Join Date
    Feb 2004
    Posts
    11,066
    What is an "RRSP"? Within what context did this exercise arise? What formula(s) are you supposed to use?

    When you reply, please include a clear listing of everything you have tried so far. Thank you!

    Eliz.

  3. #3
    Elite Member
    Join Date
    Feb 2004
    Location
    Ottawa, Ontario
    Posts
    11,763
    MissL must be Canadian like me; RRSP = Registered Retirement Savings Plan.

    First, you need to calculate 2 rates:
    Rate x: the annual rate equivalent to 6.8 cpd quarterly (use with annual deposits)
    Rate y: the monthly rate equivalent to this annual rate (use with monthly deposits)

    x = (1 + .068/4)^4 - 1
    y = (1 + x)^(1/12) - 1

    Formula = d[(1 + i)^n - 1] / i
    d = regular deposit
    i = periodic interest rate
    n = number of periods

    Value after 25 years:

    With annual deposits of $3600:
    3600[(1 + x)^25] / x

    With monthly deposits of $300:
    300[(1 + y)^300] / y

    There ya go, MissL.
    If you can't follow above, you need a face to face teacher.
    I'm just an imagination of your figment !

  4. #4
    New Member
    Join Date
    Nov 2007
    Location
    Van
    Posts
    33
    Thanks Dennis. I would go face to face with my teacher. But my courses is corresponding that is why... All we can do is just ask the teacher through email and she just don;t really know how to explain.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •