Asked by Blair Leclair on Jun 02, 2024
Verified
Scotia Bank offers a 4-year rate raiser RRSP. The annual compound rates are 2.5%, 3.2%, 3.8% and 4.2%. Determine the average annual rate of interest earned during the four year period.
A) 3.423%
B) 4.323%
C) 5.156%
D) 6.571%
E) 7.676%
Annual Compound Rates
The rate of return that is earned on an investment or paid on a loan when interest is compounded on an annual basis.
RRSP
The Registered Retirement Savings Plan (RRSP) is a Canadian investment vehicle for individuals to save for retirement, with contributions being tax-deductible and growth being tax-deferred.
- Analyze and determine the average annual rate of interest earned over a specific period.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
A
Explanation :
The average annual rate of interest is calculated by adding the annual rates together and dividing by the number of years. So, (2.5% + 3.2% + 3.8% + 4.2%) / 4 = 13.7% / 4 = 3.425%. The closest option to this calculation is 3.423%.
Learning Objectives
- Analyze and determine the average annual rate of interest earned over a specific period.