For you Math guys...

[DIPayton 10+ year member]

what better place to come for help with homework than caraudio.com..

haha, man I am so screwed and have been killing myself with this work. It's a very Canadian question haha. and because I am not Canadian, I think it's hard for me to understand the language used.. I'd probably know how to do it if I was Canadian... anyways here's the Q:

"Use the following scenario to answer the accompanying question. You deposit $5,000 into an RRSP making an average annual rate of return of 12% for 46 years. At the end of that time you pay 30% tax to Revenue Canada.

How much do you have to spend after paying tax to revenue Canada?"

I know it should have something to do with exponential functions to find an answer... but I've looked for help everywhere and I just don't understand the question. hell, I dont even know what a rate of return means... any help?

BTW, if anyone helps me then that's amazing. I dont expect there to be math guys here tho haha.

Click to read more...

 

[DIPayton 10+ year member]

or if you can explain a rate of return and how that works or an RRSP then I would be good to do it I think.

+ ****, just realized my 500th post was about Homework... I'm the biggest loser ever.

 

[Beat_Dominator 5,000+ posts]

$642,831.70 is what I got.

 

[KnOkIn It 420 10+ year member]

I have to be honest I am no idea about the whole rate of return thing or rrsp means, But if I had to make a guess I would say in the end u would have $13,416.66 to spend

 

[kombat96 10+ year member]

take the 5000 multipy it by the 12% that equals your rate of return for the 1st year. after you figure out the amount after the 46 years, take that number and multipy that by the 30% tax that amount is to be paid in taxes.

 

[DIPayton 10+ year member]

$442,831.70 is what I got.

okay... so how.. I dont need a full math formula... just some quick things on how you worked it out.

 

[sumone 10+ year member]

5000 * 1.12 ^ 46 = $918330.58 * .7 = $642831.41

Start with 5000.

Every year, you add 12%, or the number is 120% of the previous year.

Add 12% to the previous year for 46 years means...

$5000 * 1.12 * 1.12 * 1.12 * 1.12 ... * 1.12

or

$5000 * 1.12 ^ 46

70% of that = 642831.41

 

[Beat_Dominator 5,000+ posts]

Yeah then you subtract the 30% tax.

 

[Flipx99 5,000+ posts]

The answer is 642,831.41

Here's how:

PV --> 5000

I/yr --> .12

n--->46

fv= 918,330.58

*.7 = 642,831.41

It's a simple TVM problem. Man I wish I was regualrly assigned those type of problems. I am finance major.

 

[Flipx99 5,000+ posts]

A=pe^RT is the formula you need. A is amount at the end of everything. R is interest rate as a dec. T is time. P is amount invested.
Let me check over what everyone has said so far and I will let you know the right answer.

It is 1248175.19 x .3 = 374452.56

For teh win...

wrong that is considering continous compounding, not yearly

 

[Flipx99 5,000+ posts]

5000 * 1.12 ^ 46 = $918330.58 * .3 = $275499.17
Start with 5000.

Every year, you add 12%, or the number is 120% of the previous year.

Add 12% to the previous year for 46 years means...

$5000 * 1.12 * 1.12 * 1.12 * 1.12 ... * 1.12

or

$5000 * 1.12 ^ 46

30% of that = 275499.17

You started correct but ended incorrectly, unless I misunderstood the question. Most of the time you don't assume that you pay taxes each year, but perhaps in this problem you might. But you would only be taxed on the interest.

 

[Flipx99 5,000+ posts]

Financial calculator HP 10BII ftw

 

[DIPayton 10+ year member]

The answer is 642,831.41
Here's how:

PV --> 5000

I/yr --> .12

n--->46

fv= 918,330.58

*.7 = 642,831.41

It's a simple TVA problem. Man I wish I was regualrly assigned those type of problems. I am finance major.

haha finance major... ****, I think I should be believing this answer...

but why does everyone here have different answers haha.. This is only 1st year college... come on people. Actually, I remember doing this stuff in High school too... and still can't figure it out haha.

 

[kombat96 10+ year member]

Currently Active Users Viewing This Thread: 9 (9 members and 0 guests)

kombat96 , bimma85 , DIPayton , Flipx99 , HTJUNKY , Hundreth , JAZN , KnOkIn It 420 , nissanrider06

LMAO math class.

 

[JAZN 5,000+ posts]

5000 * 1.12 ^ 46 = $918330.58 * .7 = $642831.41
Start with 5000.

Every year, you add 12%, or the number is 120% of the previous year.

Add 12% to the previous year for 46 years means...

$5000 * 1.12 * 1.12 * 1.12 * 1.12 ... * 1.12

or

$5000 * 1.12 ^ 46

70% of that = 642831.41

Thats what I got.

F = P{(1 + r/n))^(nt)} x .7

where F = future value of the investment after t years

where P = present value of the investment (initial principal invested)

where r = annual compound interest rate (expressed as a decimal number)

where n = number of compounding periods per year, and

where t = time (expressed in years)