You are retiring and the balance of your RRSP is $243 126. What amount of monthly...
You are retiring and the balance of your RRSP is $243 126. What amount of monthly income, paid at the end of each month, could this provide you for 20 years if you can get a 3% return compounded monthly?
Homework Answers
Solution
Present value of annuity=Annuity amount*((1-(1/(1+r)^n))/r)
Where
r-periodic intrest rate-3%/12=.25% per month
n=number of periods=20*12=240
Annuity amount=Monthly payments
Present value of annuity=Balance of RRSP at retirement=243126
Present value of annuity=Annuity amount*((1-(1/(1+.0025)^240))/.0025)
=1,348.37096
Thus monthly payments=$1,348.37(Rounded off value)
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