Since the birth of her granddaughter, 15 years ago, Adrian has deposited $250 at thebeginning of every month into a Registered Education Savings Plan (RESP). The interestrate on the plan was 3.75% compounded monthly for the first 8 years and 4.50%compounded monthly for the next 7 years.a. What was the accumulated value of the RESP at the end of 8 years?$0.00Round to the nearest centb. What was the accumulated value of the RESP at the end of 15 years?$0.00Round to the nearest centc. What was the amount of interest earned over the 15-year period?$0.00Round to the nearest cent

Future Value: It represents the future worth of the present sum of the amount for a period of time.…

a. What was the accumulated value of the RESP at the end of 8 years? $0.00 Round to the nearest cent b. What was the accumulated value of the RESP at the end of 15 years? $0.00 Round to the nearest cent c. What was the amount of interest earned over the 15-year period?

a. What was the accumulated value of the RESP at the end of 8 years? $0.00 Round to the nearest cent b. What was the accumulated value of the RESP at the end of 15 years? $0.00 Round to the nearest cent c. What was the amount of interest earned over the 15-year period?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Since the birth of her granddaughter, 15 years ago, Adrian has deposited $250 at the
beginning of every month into a Registered Education Savings Plan (RESP). The interest
rate on the plan was 3.75% compounded monthly for the first 8 years and 4.50%
compounded monthly for the next 7 years.
a. What was the accumulated value of the RESP at the end of 8 years?
$0.00
Round to the nearest cent
b. What was the accumulated value of the RESP at the end of 15 years?
$0.00
Round to the nearest cent
c. What was the amount of interest earned over the 15-year period?
$0.00
Round to the nearest cent

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