Question

Jamie is 22 years old and works for a company that matches her 401(k) contribution up to 3%. The interest rate for her 401(k) is 8%. If she puts away 9.5% of her $41,000 salary every year, how much would she have saved in 10 years? Round your answer to the nearest cent.
a.
$34,389.17
b.
$37,140.30
c.
$80,183.12
d.
$74,243.63


Please select the best answer from the choices provided

A
B
C
D

Answer 1

D

She (and her employer) contribute 9.5% + 3% = 12.5% of $41,000 = $5,125 per year.
Future value of an ordinary annuity: FV = 5125 * [ (1.08^10 - 1) / 0.08 ]
1.08^10 ≈ 2.158924997, so FV ≈ 5125 * 14.4865625 = $74,243.63.