Question

Ted deposited​ $1750 in an RRSP on March​ 1, 2014, at​ 3% compounded quarterly. Subsequently the interest rate was changed to​ 4% compounded monthly on September​ 1, 2016, and to​ 4.5% compounded​ semi-annually on June​ 1, 2018. What was the value of the RRSP deposit on December​ 1, 2020, if no further changes in interest were​ made?

Answer 1

Particulars	Amount
Given APR	3.00%
Given compounding frequency per year	4
Effective annual rate	3.034%
(1+ 0.03/4)^4 -1
Required compounding frequency per year	12
Monthly effective rate	0.2494%
(1+ 0.03033919)^1/12 -1
Required APR	2.99253%
0.00249378*12

Particulars	Amount
Given APR	4.50%
Given compounding frequency per year	2
Effective annual rate	4.551%
(1+ 0.045/2)^2 -1
Required compounding frequency per year	12
Monthly effective rate	0.3715%
(1+ 0.04550625)^1/12 -1
Required APR	4.45838%
0.00371532*12

Appropriate monthly APR rates were above for compounding rates other than monthly given.

Particulars	Amount
Deposit	1,750.00
× FVF until Sep 2016	1.07758
Future value in Sep 1, 2016	1,885.77
× FVF until Jun 2018	1.07238
Future value in Jun 2018	2,022.27
× FVF until Dec 2020	1.11768
Future value in Dec 2020	2,260.24

Answer is:

2,260.24