Question

How long will it take an RRSP to grow to $820,000 if it takes in month-end contribution of $1,200 and earns: (Do not round intermediate calculations. Round up the number of contributions to the next integer.) a. 5.2% compounded monthly? years, month(s) b. 7.2% compounded monthly? years, month(s) c. 7.6% compounded monthly? years, month(s) d. 10.5% compounded monthly? years, month(s)

Answer 1

For 7.2% compounded monthly, it will take approximately 29 years, 10 months. For 7.6% compounded monthly, it will take approximately 28 years, 11 months. For 10.5% compounded monthly, it will take approximately 24 years, 11 months.

Step-by-step explanation:

To calculate the time it will take for an RRSP to grow to $820,000 at different compounded interest rates, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where, A is the future value, P is the principal amount, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the number of years.

Let's calculate the time it will take for the RRSP to grow to $820,000 for different interest rates:

1. For 5.2% compounded monthly, it will take approximately 34 year(s), 11 month(s).
2. For 7.2% compounded monthly, it will take approximately 29 year(s), 10 month(s).
3. For 7.6% compounded monthly, it will take approximately 28 year(s), 11 month(s).
4. For 10.5% compounded monthly, it will take approximately 24 year(s), 11 month(s).