Question

A personal trainer makes 25000 per year and has just begun contributing 6% of his salary to his 401k plan. If his employer matches 9% of his contributions, how much will have been contributed to the 401k plan after 4 years

Answer 1

(25,000×0.06)×1.09×4=6,540

Answer 2

$6540.

Explanation:

We have been given that a personal trainer makes $25000 per year and has just begun contributing 6% of his salary to his 401k plan.

Let us find trainer's contribution to 401k plan by calculating 6% of $25,000.

`\text{Trainer's contribution to 401k plan per year}=(6)/(100)* \$25,000`

`\text{Trainer's contribution to 401k plan per year}=0.06* \$25,000`

`\text{Trainer's contribution to 401k plan per year}=\$1500`

As his employer matches 9% of his contribution, so amount contributed by employer to trainer's 401k plan per year will be 9% of 1500.

`\text{Employer's contribution to trainer's 401k plan per year}=\$1500*(9)/(100)`

`\text{Employer's contribution to trainer's 401k plan per year}=\$1500*0.09`

`\text{Employer's contribution to trainer's 401k plan per year}=\$135`

`\text{Total amount contributed to personal trainer's 401k plan per year}=\$1500+\$135`

`\text{Total amount contributed to personal trainer's 401k plan per year}=\$1635`

To find the amount contributed to the 401k plan after 4 years, we will multiply $1635 by 4.

`\text{Total amount contributed to personal trainer's 401k plan after 4 years}=\$1635*4`

`\text{Total amount contributed to personal trainer's 401k plan after 4 years}=\$6540`

Therefore, $6540 will have been contributed to the 401k plan after 4 years.