Answer: To determine the amount in Heidi's 401(k) account after 15 years, we need to calculate her total contribution each month and the interest earned on that contribution over the 15-year period.
First, let's calculate Heidi's contribution each month:
11% of $3,250 = $357.50
Next, let's calculate her employer's contribution each month:
6% of $3,250 = $195
Since Heidi's contribution is $357.50, and her employer matches her contribution up to 6% of her salary, her employer will contribute $195 each month.
So, Heidi's total contribution each month is $357.50 + $195 = $552.50
Next, we can use the formula for compound interest to calculate the balance in her 401(k) account after 15 years:
A = P * (1 + r/n)^(nt)
where:
A is the balance in the account after t years
P is the principal (initial deposit)
r is the interest rate
n is the number of times the interest is compounded in a year
t is the number of years
In this case, n = 12 (because interest is compounded monthly) and t = 15 (because the calculation is for 15 years). The principal P is $552.50 (Heidi's total contribution each month). The interest rate r is 6.25%.
Plugging in the values, we get:
A = $552.50 * (1 + 0.0625/12)^(12 * 15) = $552.50 * (1.00520833)^180
Using a calculator or spreadsheet software, we can calculate this value to be approximately $27,973.81.
So, the amount in Heidi's 401(k) account after 15 years, rounded to the nearest cent, is $27,973.81.
Explanation: