Question

Sahil opened an RRSP deposit account on December​ 1, 2008, with a deposit of ​$1500. He added ​$1500 on April ​1, 2010, and $1500 ​ on May ​1, 2012. How much is in his account on February ​1, 2016, if the deposit earns 5.8 ​% p.a. compounded Monthly ​?

Answer 1

The total amount in Sahil's account on February 1, 2016, is approximately $5765.02.

Step-by-step explanation:

To calculate the amount in Sahil's account on February 1, 2016, we need to consider the deposits made and the interest earned over the years. Firstly, let's calculate the interest earned on each deposit:

1. Interest earned on the December 1, 2008 deposit:
   Interest = $1500 * (1 + 0.058/12)^(12 * (2015-2008)) - $1500 = $1500 * (1 + 0.00483)^(7*12) - $1500 = $1500 * (1.00483)^84 - $1500 ≈ $608.81
2. Interest earned on the April 1, 2010 deposit:
   Interest = $1500 * (1 + 0.058/12)^(12 * (2015-2010)) - $1500 = $1500 * (1 + 0.00483)^(5*12) - $1500 = $1500 * (1.00483)^60 - $1500 ≈ $469.90
3. Interest earned on the May 1, 2012 deposit:
   Interest = $1500 * (1 + 0.058/12)^(12 * (2015-2012)) - $1500 = $1500 * (1 + 0.00483)^(3*12) - $1500 = $1500 * (1.00483)^36 - $1500 ≈ $186.31

To calculate the total amount in Sahil's account, we need to add the interest earned to the original deposits:

Total amount = $1500 + $608.81 + $1500 + $469.90 + $1500 + $186.31 ≈ $5765.02