Question

Your RRSP savings of $35,000 are converted to a RRIF at 4.85% compounded monthly that pays $5,328 at the beginning of every month. After how many payments will the fund be depleted?

Answer 1

Information provided:

Present value= $35,000

Monthly payment= $5,328

Monthly interest rate= 4.85%/12= 0.4042

Enter the below in a financial calculator to compute the number of payments after which the fund will be depleted:

PV= -35,000

PMT= 5,328

I/Y= 0.4032

Press the CPT key and N to compute the number of payments.

The value obtained is 6.64.

The number of payments taken after which the account is depleted is 6.64.

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