help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / An RRSP is worth $223,000 after contributions of $2500 at the beginning of every six months for 16 years

An RRSP is worth $223,000 after contributions of $2500 at the beginning of every six months for 16 years

Accounting

An RRSP is worth $223,000 after contributions of $2500 at the beginning of every six months for 16 years. What effective rate of return (e.g., annual nominal interest rate compounded annually) has the plan earned?

  • 11.64%
  • 12%
  • 10.5%
  • 11.54%
  • 11.2%

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Computation of Effective Rate of Return using Rate Function in Excel:

=rate(nper,-pmt,pv,fv,type)*2

Here,

Rate = Effective Rate of Return = ?

Nper = 16*2 = 32 Periods

PMT = $2,500

PV = 0

FV = $223,000

Type = 1 (at the beginning)

Substituting the values in formula:

=rate(32,-2500,0,223000,1)*2

Rate or Effective Rate of Return = 11.2%

So, the correct option is 5th "11.2%".

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)

Related Questions