Hank Toms Is Going to Start His Retirement Savings Plan

question 176

Multiple Choice

Hank Toms is going to start his Retirement Savings Plan (RSP) by depositing $2,500 at the end of every six months for 20 years. Also, seven years from now, he is going to receive the $45,000 proceeds from a trust fund that will go directly into the RSP at that time. If his Plan earns 12% compounded monthly, how much money will Hank Toms have in the RSP in 20 years?

• A) $389,215
• B) $447,005
• C) $614,499
• D) $892,170
• E) $937,331

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, not necessarily its market value.

Annually

Occurring once every year or relating to a period of one year.

Coupon Bond

A type of bond that pays the holder periodic interest payments called coupons and returns the principal at maturity.

Yield To Maturity

The total return expected on a bond if held until it matures, considering all interest payments and principal repayment.