Question

An employer will do a 50% match on your investment to a 401k retirement plan. If you decide to contribute a monthly amount of $220, how much should be in the account after 15 years

Answer 1

Answer:

There will be $92,635.42 in the account after 15 years.

Explanation:

Missing question "The interest rate is fixed at 2.05%"

As the employer does a 50% match on the employee’s investment, the monthly contribution to the retirement plan will be = 2 * $220 = $ 440.

The future value (F) of an annuity is given by F = (P/r)[(1+r)n-1]

P is the periodic payment

r is the rate per period

n is the number of periods.

P = 440, r = 2.05/1200 and n = 15*12 = 180.

F = (440*1200/2.05)[ (1+2.05/1200)180 -1]

F = (528000/2.05)*0.359664042

F = 92635.4215493

F = $92635.42

Thus, there will be $92,635.42 in the account after 15 years.