Raymond invested $1,700 at the beginning of every 6 months in an RRSP for 11 years. For the first 6 years it earned interest at a rate of 3.70% compounded semi-annually and for the next 5 years it earned interest at a rate of 5.90% compounded semi-annually.a. Calculate the accumulated value of her investment at the end of the first 6 years
b. Calculate the accumulated value of her investment at the end of 11 years.
c. Calculate the amount of interest earned from the investment.

Answers

Answer 1

Answer:

At the end of the first six years, the investment has a total value of $33,358.31. After 11 years, the investment has grown to a total value of $97,719.38. $60,319.38 has been earned in interest.

How do I determine my interest rate?

The following equation can be used to determine interest rates: Interest equals P x R x N. P is the principle amount (sometimes known as the starting balance), and R is the interest rate (usually per year, expressed as a decimal). N represents the quantity of time periods (generally one-year time periods).

FV = $1,700 * ((1 + 0.0740/2)⁽²ˣ²²⁾ - 1) / (0.0740/2) = $33,358.31

FV = $1,700 * ((1 + 0.1180/2)⁽²ˣ²²⁾ - 1) / (0.1180/2) = $97,719.38

$1,700 * 2 * 11 = $37,400

As a result, the interest earned is as follows:

$97,719.38 - $37,400 = $60,319.38.

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