Calculating the Amount in Kiara's RRSP Account

Question:

What is the total amount in Kiara's RRSP account on May ​1, 2016, if he made multiple deposits and the account earns 6.6% p.a. compounded monthly?

Answer:

The amount in the RRSP account on May ​1, 2016, is $4038.99.

Explanation:

Kiara opened an RRSP deposit account on December​ 1, 2008, with a deposit of ​$2400. He added ​$2400 on March ​1, 2010, and ​$2400 on September ​1, 2012.

To calculate the amount in Kiara's RRSP account on May ​1, 2016, we need to consider the deposits made and the compound interest earned. The formula for compound interest is:

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

Where:

A is the amount of money in the account after time t

P is the principal deposit amount

r is the annual interest rate (expressed as a decimal)

n is the number of times interest is compounded per year

t is the number of years

Using the given information, the principal deposit amount P is $2400, the annual interest rate r is 6.6% (or 0.066), the number of times interest is compounded n is 12 (since it is compounded monthly), and the number of years t is 2016 - 2008 = 8.

Substituting these values into the formula, we can calculate the amount in the account:

A = $2400(1 + 0.066/12)^(12*8) = $2400(1.0055)^96 = $2400(1.677616) = $4038.99

Therefore, the amount in Kiara's RRSP account on May ​1, 2016, is $4038.99.