Question

Ricardo is aware that he should save as much as possible early in his career while...

Ricardo is aware that he should save as much as possible early in his career while his personal responsibilities are minimal. Therefore he has adopted an aggressive savings plan – put aside $1,500 in his TFSA at the beginning of each month for a year. (He has never contributed to a TFSA and has sufficient contribution room.) Ricardo’s savings are expected to earn 2% per annum, compounded semi-annually and he will make his first contribution 6 months from today. How much will he have in his TFSA in 2 years’ time if no further contributions are made?

  1. $18,195
  2. $18,377
  3. $18,407
  4. $18,502

Homework Answers

Answer #1
Month Investment In TFSA Interest 2% per annum Compunded amount
1 0 0 0
2 0 0 0
3 0 0 0
4 0 0 0
5 0 0 0
6 0 0 0
7 1500 2.5 1502.5
8 1500 5 3007.5
9 1500 7.5 4515
10 1500 10 6025
11 1500 12.5 7537.5
12 1500 15 9052.5
13 1500 17.5875 10570.09
14 1500 20.0875 12090.18
15 1500 22.5875 13612.76
16 1500 25.0875 15137.85
17 1500 27.5875 16665.44
18 1500 30.0875 18195.53
19 0 30.325875 18225.85
20 0 30.325875 18256.18
21 0 30.325875 18286.50
22 0 30.325875 18316.83
23 0 30.325875 18347.15
24 0 30.325875 18377.48

Correct answer is B

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