Question

MULCHI Close Date: Thu, Jul 30, 2020 4:15 PM Question 10 of 13 Since the birth of her daughter, 18 years ago, Lucy has deposited $50 at the beginning of every month into a Registered Education Savings Plan (RESP). The interest rate on the plan was 3.70% compounded monthly for the first 12 years and 4.40% compounded monthly for the next 6 years. a. What would be the accumulated value of the RESP at the end of 12 years? Round to the nearest cent . SAME PROGRESS SUEMASS

Answer 1

Amount Deposited at the beginning of each month in RESP = $50

a). Calculating the Accumulated value at the end of 12 years:-

[(1+r)" – 1] FutureValue = C* *(1+r)

Where, C= Periodic Deposits = $50

r = Periodic Interest rate = 3.70%/12 = 0.308333%

n= no of periods = 12 yrs*12 =144

1 FutureValue = 50 * [(1 + 0.00308333)144 0.00308333 *(1 + 0.00308333

[1.55786594899 – 1] FutureValue = 50 * 0.00308333 * (1 + 0.00308333

Future Value = $9074.37

So, ACcumulated value at the end of 12 year is $9074.37

Note- as question has asked to calculate accumulated value at the end of 12 year , the same has been calculated.