Answer:
$610,297.11
Step-by-step explanation:
The problem seems to make several assumptions:
- contributions are made at the end of each year
- contributions and employer matching funds are not taxed until retirement
- the 15% tax rate applies to the account balance amount at retirement
Of these, the last is least likely to be true in the United States.
___
Based on the assumptions above, we compute the amount from the future value of the series of contributions, then subtract 15% from that result.
FV = P·((1 +r)^n -1)/r . . . . where P is the amount of each payment, r is the annual interest rate, n is the number of payments.
The amount deposited each year is ...
$4770 + 0.60·4770 = $7630
Then the future value after 34 deposits is ...
FV = 7630·(1.055^34 -1)/0.055 ≈ 717,996.60
When this amount is reduced by the assumed 15% tax rate, it becomes ...
$717,996.60 - 0.15·717,996.60 = $610,297.11
