Question

Nicole has just turned 41 and has accumulated $24 500 in her RRSP. She makes month-end contributions of $400 to the plan and intends to do so until she retires at the age of 60. The RRSP will be allowed to continue to accumulate until she reaches the age of 65. If the RRSP earns 6% compounded monthly for the next 24 years, how much will her RRSP contain when she turns 65?

Answer 1

	Pv	Current amount in RRSP	$24,500
	Rate	Monthly interest rate=(6/12)%	0.50%
	Nper	Number of Months Savings tillshe retires	228	(60-41)*12
	Pmt	Monthly Savings	$400
	FV	Future value of savings at age 60	$245,820.47	(Using FV function of excel with Rate=0.5%, Nper=228, Pmt=-400, Pv=-24500)
		Excel Command: =FV(0.5%,228,-400,-24500)
		Amount Accumulated at age 65
	Pv1	Amount Accumulated at age 60	$245,820.47
	Rate	Monthly interest rate=(6/12)%	0.50%
	Nper1	Number of months=5*12	60
	FV1	Accumulated amount at age 65	$331,574.98	(Using FV function of excel with Rate=0.5%, Nper=60, Pv=-245820.47)
		Excel Command:=FV(0.5%,60,,-245820.47)