Jack Gromans financial plan is designed to accumulate sufficient funds in his RRSP over the next 28 years to purchase an annuity paying $6000 at the end of each month for 25 years He will be able to contribute $7000 to his RRSP at the end of each year for the next 10 years What year end contributio...

At a focal date 28 years from now FV of RRSP contributions PV of the ...

Jack Gromans financial plan is designed to accumulate sufficient funds in his RRSP over the next 28

Question:

Jack Groman’s financial plan is designed to accumulate sufficient funds in his RRSP over the next 28 years to purchase an paying $6000 at the end of each month for 25 years. He will be able to contribute $7000 to his RRSP at the end of each year for the next 10 years. What year-end contribution must he make for the subsequent 18 years to achieve his objective? For these projections, assume that Jack’s RRSP will earn 7.5% compounded annually, and that the payments are based on a return of 7.5% compounded monthly.
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...