Question

Trent is 25 years old and works for a company that matches his 401(k) contribution up to 5%. the interest rate for his 401(k) is 7.3%. if he puts away 10% of his $32,000 salary every year, what would the total of his 401(k) be in 10 years? round your answer to the nearest cent. a. $67,266.16 b. $72,176.59 c. $33,250.60 d. $35,677.89

Answer 1

If he puts away 10% of his $32,000 salary every year, The total of his 401(k) be in 10 years is: a. $67,266.16.

401(k) in 10 years

First step

Contribution=(10% ×$32,000)+ 50% from employer

Contribution=$3,200+ ($3,200×50%)

Contribution=$3,200+$1,600

Contribution=$4,800

Second step

Future value= 4800 (1 + 0.073)^10 – 1/ 0.073

Future value= 4800 (1 .073)^10 – 1/ 0.073

Future value= 4800 (2.0230062274104 – 1) / 0.073

Future value= 4800 (1.0230062274104) / 0.073

Future value=$4,910.42989157/0.073

Future value=$67,226.16

Therefore the total of his 401(k) be in 10 years is: a. $67,266.16.

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