Question

John’s employer will match his contributions into his retirement plan, but only up to 3% of his salary. John decides to invest 5% of his $42,000 salary into the retirement plan. Find the future value of the annuity in 5 years if it earns 8% compounded quarterly.
$62,406.79



$20,409.79



$255,122.39



$9,909.79


I need help with this plz, im confused and im watching videos but idk how to do it. i will mark brainliest

Answer 1

Answer:

$20,409.79

Step-by-step explanation:

First find John’s quarterly salary. ;$42,000 / 4 = $10,500 ;Total Contributions = John’s + Employer’s ;Total Contributions = $10,500 x 0.05 + $10,500 x 0.03 ;Total Contributions = $840 ;Find the interest rate per compounding period and the number of compounding periods. ;8% / 4 = 2% ;5 x 4 = 20 periods ;The factor from the table for 2% and 20 is 24.29737. ;Amount = $840 x 24.29737 ;Amount = $20,409.79