Answer:
Joannie contributes $2,000 to her record. 50% of the venture is coordinated by the business, that is $1,000 is contributed. The normal yearly return is 4%. The period is 20 years. The tax rate is 39.6%.
Compute the immediate return.
Immediate return = Tax savings + Employer matching contribution
Immediate return = ($2,000 × 39.6%) + ($2,000 × 50%)
Immediate return = $792 + $1,000
Immediate return = $1,792
Compute the return on investment.
Return on investment = Immediate return / Amount invested by Joannie
Return on investment = $1,792 / $2,000
Return on investment = 0.896 or 89.6%