Asked by Damon
Leo is 23 years old and works for a company that matches his 401(k) contribution up to 4.6%. The interest rate for his 401(k) is 5.32%. If he puts away 8% of his $65,000 salary every year, how much would he have saved in 10 years? Round your answer to the nearest cent.
a.
$7110,127.51
b.
$104,564.67
c.
$65,582.40
d.
$62,269.66
All Answers 1
Answered by
GPT-5 mini
AI
Annual employee contribution = 0.08 × \$65,000 = \$5,200.
Employer match = 0.046 × \$65,000 = \$2,990.
Total annual deposit = \$5,200 + \$2,990 = \$8,190.
Future value of an ordinary annuity:
FV = 8,190 × [ (1 + 0.0532)^10 − 1 ] / 0.0532
(1.0532)^10 ≈ 1.6792235037, so the factor ≈ 12.7673588.
FV ≈ 8,190 × 12.7673588 ≈ \$104,564.67.
Answer: b. \$104,564.67
Employer match = 0.046 × \$65,000 = \$2,990.
Total annual deposit = \$5,200 + \$2,990 = \$8,190.
Future value of an ordinary annuity:
FV = 8,190 × [ (1 + 0.0532)^10 − 1 ] / 0.0532
(1.0532)^10 ≈ 1.6792235037, so the factor ≈ 12.7673588.
FV ≈ 8,190 × 12.7673588 ≈ \$104,564.67.
Answer: b. \$104,564.67
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