Calculate the value of annual contributions

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The advantage of the RESP is that the government will contribute $1 for every $5 parents put in, up to a maximum government grant $400 per year per child.

1. Assume the Wong family contributes $2000 per year over a 16-year period to an RESP earning 4.85% interest compounded semi-annually.

a) Calculate the value the plan would have at the start of the 17th year.

b) Calculate the value of annual contributions of $2000 into a non-RESP plan over a 16-year period at 4.85% compounded semi-annually.

Determine the difference in plan values of the RESP plan and those of the non-RESP plan

Reference no: EM132974459

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