Question
Mahmoud Hassan will earn $50,000 this year.At the end of this year and subsequent years his salary will increase by 3%.Each year-end he deposits 18%
Mahmoud Hassan will earn $50,000 this year.At the end of this year and subsequent years his salary will increase by 3%.Each year-end he deposits 18% of his salary into an RRSP.After 10 years he will get a promotion and his salary will increase by 20% for the next year, on top of the 3% automatic increase.For 10 years he will continue to get the 3% increase each year.He will still save 18% of his salary each year into an RRSP.He will earn 5% p.a. on the RRSP investments.
a)How much will he have in his RRSP after 20 years?
b)If the inflation rate is 2% p.a. for every year, what is the real value of that RRSP balance, in today's dollars?
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