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Thread: [MOVED] finding rate of return: compounded nominal rate

  1. #1
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    [MOVED] finding rate of return: compounded nominal rate

    Hi guys, I am having trouble understanding the question. Can someone please explain how to find the compounded nominal rate?

    After 10 years of contributions of $2,000 at the end of every six months to an RRSP, the accumulated amount stood at $65,727.82. What semi-annually compounded nominal rate and equivalent compounded monthly rate of return were earned by the funds in the RRSP?

  2. #2
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    Well MissL, someone else may help you with this, but not me;
    your wording is hard to follow: can you ask someone in class
    to check your spelling, and show you how to post clearly; thank you.
    I'm just an imagination of your figment !

  3. #3
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    Hey good job, MissL; very clear now

    OK; what we have using financial formula:

    2000[(1 + i)^21 - 1] / i = 65727.82 : 21 is number of semi-annual periods in 10 1/2 years

    And we want to solve for i, the interest rate used at every semiannual period.

    Unfortunately, "i" cannot be isolated in such equations, so you need to go by
    "trial and error": try rates until you hit one that works!
    This is a process known as iteration.

    Is this all news to you?

    Anyway, rate comes out to be 4.25%; I have a cheap financial calculator
    that "does the work" on these.

    So 2000[(1.0425)^21 - 1] / .0425 = 65727.82
    I'm just an imagination of your figment !

  4. #4
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    Yes this stuff is new to me. But I just want to say thanks for your help.

  5. #5
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    well actually I am using SHARP EL 738 financial calculator ...

  6. #6
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    Quote Originally Posted by missl
    well actually I am using SHARP EL 738 financial calculator ...
    So you can get the 4.25 %, right?
    Still got the instruction manual?
    I'm just an imagination of your figment !

  7. #7
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    ?

  8. #8
    Elite Member stapel's Avatar
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    Quote Originally Posted by missl
    ?
    You don't know how to work with percentage...?

    . . . . .Google results for "converting percents decimals"



    Eliz.

  9. #9
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    opps I mean yes

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