Shane is about to have his twenty-fifth birthday. He has set a goal of retiring at age 55 with $700,000 in an RRSP. For planning purposes he is assuming that his RRSP will earn 8% compounded annually.
a. What contribution on each birthday from age 25 to 54 inclusive will be required to accumulate the desired amount in his RRSP?
b. If he waits five years before starting his RRSP, what contribution on each birthday from age 30 to 54 inclusive will be required to accumulate the target amount?