# Cynthia currently has $31,000 in her RRSP. She plans to contribute $5000 at the end of each

## Question:

a. If her RRSP earns 8.75% compounded annually for the next 17 years, and the fund from which the annuity is paid will earn 5.4% compounded monthly, what monthly payments will she receive?

b. If the rate of inflation for the next17year sis2%, what will be the purchasing power (in today’s dollars) of the monthly payments at the start of the annuity?

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,...

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