On February 1 of 3 Successive Years, Roger Contributed $3,000

question 277

Short Answer

On February 1 of 3 successive years, Roger contributed $3,000, $4,000, and $3500, respectively, to his RRSP. The funds in his plan earned 9% compounded monthly for the first year, 8.5% compounded quarterly for the second year, and 7.75% compounded semi-annually for the third year. What was the value of his RRSP 3 years after the first contribution?

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Definitions:

Bandwagon Effect

Positive network externality in which a consumer wishes to possess a good in part because others do.

Network Externalities

Benefits or detriments to a product's value that result from the number of users the product has.

Negative Network Externalities

Adverse effects on a user of a product or service because the number of other users is too large or incompatible in some way.

Snob Effect

A phenomenon where the demand for a particular good increases as the price increases because the good is perceived as exclusive or high-status.