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Answer using compound interest formula. Do not use excel in answering. Investing for the Future Gabrielle, a 2 2 - year - old Profit &
Answer using compound interest formula. Do not use excel in answering.
Investing for the Future
Gabrielle, a yearold Profit & Loss P&L analyst, has been working for one year after
graduating with a degree in Business and Finance.
She has decided to start saving for retirement. She has a chequing account that earns
compounded annually, and she decides to transfer this amount into an RRSP that invests in the
bond market. The manager at her local bank assures her that the RRSP she chose would generate returns of compounded quarterly.
Thanks to her finance background, Gabrielle knows the importance of being a wellinformed
investor and asks a series of important questions to the bank manager.
She wants to know if investing her money at compounded monthly or at compounded semiannually would give her a higher accumulated value than the offered rate at the end of the same time period. Hint: Consider determining and interpreting the effective rate for each situation.
If she wants to withdraw an amount equal to of the original amount invested at the end of years and another amount equal to of the original amount invested at the end of years, what percent of her original investment to decimal places would be available for withdrawal at the end of years?
If she would like to make a deposit equal to of the original investment in years and another deposit equal to of the original investment in years, what percent of her original investment to decimal places would be available for withdrawal at the end of years?
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