Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

CFA Events Calendar

View full calendar

CFA Events Calendar

View full calendar

Recommended Discussions

See how our partners can help you ace your CFA exams.

Annuity question —RRSP account

Hi guys, 

so glad to join this. 

I am currently preparing for CFA level 1. The question I encountered is : 

currently the RRSP account has a balance of 120000, and this person wanted to start to save $8000 at the end of each year to be able to have $1500000 in 30 years . What’s the interest rate ? 

I understand in the calculator input as $8000 PMT , PV 120000, N 30 years, but FV is -1500000. The answer is r= 6.54%

i don’t understand why FV Input in the financial calculator should be negative. 

Could someone help explain ? 



  • My understanding is that it should be:

    PV = $120,000 (money PUT IN account)
    PMT = $8,000 (money GOING IN account)
    N = 30 (number of years)
    FV = -$1,500,000 (money COMING OUT of account at the end, or a final 'payment')

    Alternatively, you could view it this way:

    PV = -$120,000 (money LEAVING PERSON to go into RRSP)
    PMT = -$8,000 (money LEAVING PERSON to go into RRSP)
    N = 30 (number of years)
    FV = $1,500,000 (money RETURNING TO PERSON from RRSP)
Sign In or Register to comment.