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May 10th, 2019, 02:03 PM   #1
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From: tornto

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investment

You and your spouse have just welcomed your first child. You realize you need to start saving for his education. You decide that you will begin investing 100/month into an RESP until his 18th birthday. Use your calculator's tvm solver answer


A) Assuming you can earn an average 7% on your investment (compounded monthly) how much will the RESP be worth on the 18th birthday?

Future Balance
$43,679

b) With an RESP investment the government contribute 20% of what you invest directly into your RESP fund. If this 20% is added to your monthly investment, how much is really invested every month?


c) Use this new monthly amount to determine the value of the RESP on your son's 18th birthday. How much more was earned with the government's 20% contribution?


d) You decide to start a second RESP when your daughter is born and again invest 100/month up to her 18th birthday. It is expected that you will be able to earn an average of 7,4% compounded monthly on this investment. Calculate the total amount of this RESP using just you monthly investment and compare this to the amount it would be if you consider the 20% government contribution.

Please help.
Thanks.

Last edited by skipjack; May 10th, 2019 at 10:40 PM.
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May 10th, 2019, 10:59 PM   #2
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Is $43,679 your answer or the expected answer?
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May 11th, 2019, 09:54 PM   #3
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no i did calculation and

43072.10266



for question 2) really no clue how to solve it

thanks
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May 11th, 2019, 11:44 PM   #4
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I got 43323 by repeatedly calculating the end-of-month value of the RESP. How did you get 43072 and what were you referring to as "question 2)"?
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May 12th, 2019, 01:56 PM   #5
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Quote:
Originally Posted by skipjack View Post
I got 43323 by repeatedly calculating the end-of-month value of the RESP. How did you get 43072 and what were you referring to as "question 2)"?

N = 216 (= 18*12)
I% = 7
PV = 0
PMT = 100
FV = 43072.10266
P/Y = 12
C/Y = 12


sorry b) no clue how to solve
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May 12th, 2019, 06:07 PM   #6
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How was FV = 43072.10266 obtained?

The wording of part (b) could be clearer, but I think it means that 120 is invested monthly.
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May 12th, 2019, 09:57 PM   #7
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The question asked for using TVM CALCULATORS
STILL B) NO CLUE
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May 13th, 2019, 11:55 PM   #8
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a


N = 216 (= 18*12)

I% = 7

PV = 0

PMT = 100

FV = 43072.10266

P/Y = 12

C/Y = 12




b)


100*20%= 20



c)


100+20=120


216


7%


tvm solver gives


51686.52




d) no clue?


please correct if i am wrong
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