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Math Help - Nominal Rate

  1. #1
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    Nominal Rate

    Here the question that i hope to get some help on...

    After 10 years of contributions of $2,000 at the end of every six (6) months to an RRSP, the accumulated amount stood at $65,727.82. What semi-annually compounded nominal rate and equivalent compounded monthly rate of return were earned by the funds in the RRSP?

    Using my calculator I got this far...
    0 PV
    21 N
    -2,000 PMT
    65,727.82 FV
    COMP
    I
    4.2507

    4.2507 would be the periodic monthly rate, correct?

    thanks,
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  2. #2
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    baring in mind that i know nothing about your calculator.....

    I is probably the "equivalent monthly compunded rate". You need to convert it to a semi-annual nominal rate using standard methods.
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  3. #3
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    • Periodic is 4.251
    • semi annaully compound nominal would be 4.25 x 2 = 8.502
    • equivalent compounded monthly rate is 0.6689%


    Am i in the ball park?

    Thanks,
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  4. #4
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    Anyone?

    Thanks!
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  5. #5
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    Quote Originally Posted by petedam View Post
    • Periodic is 4.251
    • semi annaully compound nominal would be 4.25 x 2 = 8.502
    • equivalent compounded monthly rate is 0.6689%

    Am i in the ball park?
    No.
    m = monthly cpd. rate:
    (1 + m)^12 = 1.08502
    1 + m = 1.08502^(1/12)
    m = .006823.... or .6823%
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  6. #6
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    Quote Originally Posted by Wilmer View Post
    No.
    m = monthly cpd. rate:
    (1 + m)^12 = 1.08502
    1 + m = 1.08502^(1/12)
    m = .006823.... or .6823%
    Thanks...I re- did and got 0.6823...not sure what happened the first time.
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  7. #7
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    is that a spambot? i cant quite tell
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  8. #8
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    Quote Originally Posted by springfan25 View Post
    is that a spambot? I cant quite tell
    what?!
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  9. #9
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    the post i was referring to has been deleted. I wasn't referring to your answer or any other post that is still in the thread
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