Bill plans to fund his registered retirement savings plan (RRSP) with a contribution of $2,000 at the end of each year for the next 20 years. If Bill can earn 12 percent on his contributions, how much will he have at the end of the twentieth year?

Question

Quizplus · Accepted Answer

We can use the future value formula for an annuity to calculate the worth of Bill's RRSP contribution after 20 years:

FV = C × [((1 + r)^n - 1) / r]

Where:
C = Annual contribution = $2,000
r = Annual interest rate = 12% = 0.12
n = Number of periods = 20

Plugging in the values, we get:

FV = $2,000 × [((1 + 0.12)^20 - 1) / 0.12] = $144,105.08

Therefore, Bill will have approximately $144,105 in his RRSP at the end of the twentieth year. None of the other answer choices are accurate.

Bill Plans to Fund His Registered Retirement Savings Plan (RRSP)