Question

Will is 30 years old and works for a company that matches his 401(k) contribution up to 3%. The interest rate for his 401(k) is 7.13%. If he puts away 9% of his $41,000 salary every year, how much would he have saved in 10 years?

Answer 1

c.

$68,395.76

Explanation:

Answer 2

$68395.76

Explanation:

Will is 30 years old. He works for a company that matches his 401(k) to 3%

The interest rate for his 401(k) = 7.13%

If he puts 9% of his salary, we have

9/100 * 41000

= 3690

The employer contributes a maximum of 3% . So we have

3/100 * 41000

= 1230

The total annual contribution of will = 3690 + 1230

= $4920

The money saved after 10 years is given as

FV = [P(1+r)^n - 1] / r

n = 10

P =annual payment = 4920

r = rate of interest = 7.13%

= 0.0713

FV = [4920(1 + 0.0713)^10 - 1 ]/ 0.0713

= $68395.76

He will save $68,395.76