Someone in the 15% Tax Bracket Can Earn 8% Annually

question 27

Multiple Choice

Someone in the 15% tax bracket can earn 8% annually on his investments in a tax-exempt RRSP account. What will be the value of a $10,000 investment after 5 years (assuming annual compounding) ?

• A) $6,805
• B) $14,693
• C) $15,528
• D) $20,114
• E) $50,000

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Definitions:

Scrap Value

The estimated residual value of an asset after it has reached the end of its useful life.

Transmitter

A device that sends signals, such as radio waves, from one location to another, typically used in communication systems.

Double-Declining-Balance

An accelerated depreciation method that doubles the rate at which an asset's book value is reduced compared to straight-line depreciation.

Scrap Value

A projection of the sale price for an asset at the point where it ceases to have utility.