For you Math guys...

[DIPayton 10+ year member]

haha thanks a lot. I usually don't have problems with my work... just needed refreshing on my high school math I guess.

BTW, I had my 500th post in here!!! what a wasted post.

 

[Flipx99 5,000+ posts]

Got anymore...I really don't feel like doing my own homework

 

[JAZN 5,000+ posts]

Got anymore...I really don't feel like doing my own homework

hahaha you too huh. I've put more work into this thread than this homework sitting in front of me.

 

[Flipx99 5,000+ posts]

yeah, business law sucks...but not as much as my calculus or stats 2 test tomorrow.

 

[DIPayton 10+ year member]

haha I'll give you my next 1... 2 more at the most haha... I think I can do this one, but I'm better off getting a pro to do it haha...

here they go:

"Suppose instead of putting your money into an RRSP, you invest in stock outside of an RRSP. You still deposited $5000.00 for 46 years making an average annual rate of return of 12%. The difference is that you had to pay 30% tax on the interest made every year to the government. How much do you have to spend at the end of 46 years?"

and Q2:

"Compare the amount of money you have after saving INSIDE an RRSP vs. having saved OUTSIDE the RRSP."

 

[DIPayton 10+ year member]

yeah, business law sucks...but not as much as my calculus or stats 2 test tomorrow.

busniness law... must really be shitty if you're doing my work over that.

haha, but I'm going to be on my way to a law degree. Just gotta get the mathematic requirements out of the way first. My biggest problem I have.

 

[Hundreth 10+ year member]

Discrete Structures class FTW!

 

[Flipx99 5,000+ posts]

haha I'll give you my next 1... 2 more at the most haha... I think I can do this one, but I'm better off getting a pro to do it haha...
here they go:

"Suppose instead of putting your money into an RRSP, you invest in stock outside of an RRSP. You still deposited $5000.00 for 46 years making an average annual rate of return of 12%. The difference is that you had to pay 30% tax on the interest made every year to the government. How much do you have to spend at the end of 46 years?"

and Q2:

"Compare the amount of money you have after saving INSIDE an RRSP vs. having saved OUTSIDE the RRSP."

I haven't ever encountered such a problem as in this question but this is how I would approach it. You are only getting 70% or the 12%, therefore a interest rate of 8.4%. However, something tells me this may not be correct. Your future value under this assumption is 204,322.87.

918330.58-204322.87 = 438508.54

 

[Flipx99 5,000+ posts]

btw what the hell is a rrsp?

 

[JAZN 5,000+ posts]

I haven't ever encountered such a problem as in this question but this is how I would approach it. You are only getting 70% or the 12%, therefore a interest rate of 8.4%. However, something tells me this may not be correct. Your future value under this assumption is 204,322.87.
918330.58-204322.87 = 438508.54

I did the same thing,

=5000(1+.12(.7))^46

but that number seems kinda low. Not sure if it's correct.

 

[JAZN 5,000+ posts]

btw what the hell is a rrsp?

Registered Retirement Savings Plan? not sure.

 

[Flipx99 5,000+ posts]

I did the same thing,=5000(1+.12(.7))^46

but that number seems kinda low. Not sure if it's correct.

Well, you are losing 1/3 of your previous compounding...

 

[DIPayton 10+ year member]

btw what the hell is a rrsp?

I have been wondering that too. That is why I did not even want to answer the questions. Thought it would have an impact on the formula or outcome of the questions. It's all Canadian I guess... I'm getting sick of how teachers, professors and instructors up here all assume that you are Canadian.

 

[JAZN 5,000+ posts]

Well, you are losing 1/3 of your previous compounding...

Simple reasoning is beyond me.

 

[Flipx99 5,000+ posts]

Registered Retirement Savings Plan? not sure.

That must be a canadian eqivalent to in the other case roth ira, but there is no investment plan like that where you pay taxes each year on growth. Just at the beginning or the end. Furthermore, most ( none I know) may taxes by selling securities (unless they sell poor ones to offset capital gains) And this explains why. You seriously injure your compounding multiple.