Aaron contributed $3000 to his RRSP at the end of every half-year

Finance Aug 12, 2020

Aaron contributed $3000 to his RRSP at the end of every half-year. What was the value of his RRSP after 11.5 years if the RRSP grew at 2.5% compounded semiannually? (Round your answer to 2 decimal places.)

Expert Solution

Computation of the value of the RRSP after 11.5 years:-

FV = PV*(1+rate)^n

Here,

n = 11.5*2 = 23 years (semiannual)

Rate = 2.5%/2 = 1.25% (semiannual)

FV = $3000*(1+1.25%)^23

= $3000*1.3307

= $3,992.15

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