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PFprob3

Page history last edited by PBworks 17 years, 9 months ago

Problem 3 of 3

 

Bonnie has recently inherited $10 000.00 and has decided to invest it for her retirement. She will invest in a fixed income deposit paying 6% per annum, compounded annually. By investing in an RRSP she will receive a tax rebate of 39% of her investment. The first year, she invests %10 000.000. At the begining of the second year ONLY she adds the tax rebate of $3 900.00 to her initial investment. She makes no other additional payments, allowing her investment to grow by compounding the interest.

 

(a) What is her closing balance after 10 years?

 

(b) Bonnie withdraws all the money from her RRSP after 10 years. The amount is taxed at a rate of 22%. How much income tax did she have to pay on her investment?

 

(c) How much money remains after all the taxes have been paid?

 

 

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