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When Crystal retires in 17 years, she wants to receive $750.00 payments at the start of...

When Crystal retires in 17 years, she wants to receive $750.00 payments at the start of every month for 26 years from her RIF that earns 2.80% compounded semi-annually. What beginning of quarter deposits does Crystal have to make into his RRSP that earns 2.50% compounded quarterly for the 17 years until she retires?

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Expert Solution

Effective monthly rate =(1+Rate/2)^(1/6)-1 =(1+2.8%/2)^(1/6)-1 =0.231983753029419%
Number of Months after retirement =12*26 =312
The value at retirement using annuity due formula =(1+r)*PMT*((1-(1+r)^-n)/r)
=(1+0.231983753029419%)^750*((1-(1+0.231983753029419%)^-312)/0.231983753029419%) =166781.9528

Rate per quarter =2.5%/4 =0.625%
Number of quarters =17*4 =68
Quarter payment =The value at retirement /((1+r)*((1+r)^n-1)/r) =166781.9528/((1+0.625%)*((1+0.625%)^68-1)/0.625%))
=1963.56

jeff jeffy answered 2 years ago
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