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**Unformatted text preview: **. If contributions start this year, the
amount
in the RRSP 30 years from now
will be (1 + i ) n − 1
FV = PMT i 30 1.08 − 1 = $1000 0.08 = $113,283
If contributions start in the sixth year and
continue for 25 years, the RRSP will be
worth 1.08 25 − 1 FV = $1000 0.08 = $73,106 The RRSP will be worth
$113,283 – $73,106 = $40,177 more
as a result of the first 5 years’ contributions. 46 Same I/Y P/Y 12 ENTER (making C/Y = P/Y = 12)
60 N 106153.70 + / – PV 300 + / – PMT
CPT FV Ans: 188,830.08
8 I/Y P/Y 1 ENTER (making C/Y = P/Y = 1)
30 N 0 PV 1000 + / – PMT
CPT FV Ans: 113,283 Same I/Y, P/Y, C/Y, PV, PMT
25 N CPT FV Ans: 73,106 Business Mathematics in Canada, 7/e Exercise 10.2 (continued)
27. If $3000 is contributed at the end of each
year
for the next 30 years, (1 + i ) n − 1
FV = PMT i 1.08 30 − 1 = $3000 0.08 = $339,850
If $6000 is contributed at the end of each
of the last 15 years, 1.0815 − 1 FV = $6000 0.08 = $162,913 The $3000 contribution for 30 years will
result in
$339,850 – $162,913 = $176,937
more in the RRSP. (The first plan’s future value is
more than twice the second plan’s future value.) 8 I/Y P/Y 1 ENTER (making C/Y = P/Y = 1)
30 N 0 PV 3000 + / – PMT
CPT FV Ans: 339,850 Same I/Y, P/Y, C/Y, PV
15 N 6000 + / – PMT
CPT FV Ans: 162,913 Chapter 10: Ordinary Annuities: Future Value and Present Value 47 48 Business Mathematics in Canada, 7/e Exercise 10.3
1. Given: j = 8%; m = 1; term = 25 years
%
i = 81 = 8%; n = 1(25) = 25
1 − ( 1 + i ) − n 1 − 1.08 −25 PV = PMT = PMT 0.08 = 10.6747762 PMT
i (a) PMT = $1000
(b) PMT = $2000
PV = $10,674.78
PV = $21,349.55
8 I/Y P/Y 1 ENTER (making C/Y = P/Y = 1)
25 N 1000 PMT
0 FV CPT PV Ans: –10,674.78 Same I/Y, P/Y, C/Y
Same N, FV
2000 PMT CPT PV Ans: –21,349.55 Chapter 10: Ordinary Annuities: Future Value and Present Value (c) PMT = $3000
PV = $32,024.33
Same I/Y, P/Y, C/Y
Same N, FV
3000 PMT CPT PV Ans: –32,024.33 49 Exercise 10.3 (continued)
3. PMT = $1000 and n = 20 in all parts.
a. For j = 5% compounded annually,
1 − ( 1 +...

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