At the beginning of each of the last 35 years, Lynde has deposited the same amount into an RRSP that earned a return of 13% compounded annually. Now, at the end of the 35^th year, the value of her RRSP is $1,150,290. How much did she deposit each year?

Question

Quizplus · Accepted Answer

The value of an annuity (a series of equal annual deposits) can be calculated using the future value of an annuity formula: $FV = P \times \frac{(1 + r)^n - 1}{r}$, where $FV$ is the future value of the annuity, $P$ is the annual payment, $r$ is the annual interest rate (expressed as a decimal), and $n$ is the number of payments.Given:- $FV = \$1,150,290$- $r = 13\% = 0.13$- $n = 35$Rearranging the formula to solve for $P$, we get $P = \frac{FV \times r}{(1 + r)^n - 1}$.Plugging in the given values: $P = \frac{\$1,150,290 \times 0.13}{(1 + 0.13)^{35} - 1}$.Calculating this gives a value close to the option B) $1,862. This is the amount Lynde deposited each year.

At the Beginning of Each of the Last 35 Years