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

#### missl

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

After 10 ½ 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?

#### Denis

##### Senior Member
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.

#### Denis

##### Senior Member
Hey good job, MissL; very clear now :wink:

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

#### missl

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

#### missl

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

#### Denis

##### Senior Member
missl said:
well actually I am using SHARP EL 738 financial calculator ...
So you can get the 4.25 %, right?
Still got the instruction manual?

? :?

Staff member

#### missl

##### New member
opps I mean yes :lol: