# Compound Interest Calculation: Chen's RRSP Deposit Account

## How much is in Chen's RRSP deposit account on September 1, 2016?

Chen opened an RRSP deposit account on December 1, 2008, with a deposit of $2300. He added $2300 on August 1, 2010, and $2300 on December 1, 2012. Given that the deposit earns 6.8% p.a compounded monthly, what is the total amount in his account on September 1, 2016?

## Answer:

The amount in Chen's RRSP deposit account on September 1, 2016, is approximately $3816.02.

To calculate the amount in Chen's RRSP deposit account on September 1, 2016, we can use the formula for compound interest:

**A = P(1 + r/n)^(nt)**

Where:

**A = Final amount**

**P = Principal (initial deposit)**

**r = Annual interest rate (in decimal form)**

**n = Number of times interest is compounded per year**

**t = Number of years**

Given:

**Principal (P) = $2300**

**Annual interest rate (r) = 6.8% = 0.068 (in decimal form)**

**Interest is compounded monthly, so n = 12 (12 times per year)**

**t = 2016 - 2008 = 8 years (from December 1, 2008, to September 1, 2016)**

Using the formula:

**A = $2300(1 + 0.068/12)^(12*8)**

Calculating the expression inside the parentheses:

**(1 + 0.068/12) = 1.00566667 (rounded to 8 decimal places)**

Plugging in the values:

**A = $2300(1.00566667)^(96)**

Calculating the final amount:

**A ≈ $2300(1.65892460)**

Therefore, the total amount in Chen's RRSP deposit account on September 1, 2016, is approximately $3816.02.