question archive Jack makes annual contributions of $2000 starting on his 27th birthday
Jack makes annual contributions of $2000 starting on his 27th birthday
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- Jack makes annual contributions of $2000 starting on his 27th birthday. How much will he accumulate in his RRSP by age 60, if RRSP earns 8% compounded annually and NO CONTRIBUTION is made on his sixtieth birthday? *
- Joseph deposits $1000 in his savings account at the end of first year. He plans to increase the deposit size by 10% every year till 10th year. Find the accumulated value in his account at the end of 10th year if interest is j1=7% *
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1) $ 315,253.34
(Future value of annuity due)
Since the annual deposit is made at the date of his birthday, the interest payment will be at the beginning of the period, hence, annuity due.
2) $ 20,886.37
(Future value of ordinary annuity)
End-of-period deposits are classified as ordinary annuity
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