You started your ﬁrst job after graduating from college. Your company offers a retirement plan for which the companycontributes 25% of what you contribute each year. You expect to contribute $5,000 per year from your salary. You decideto invest the contributions in assets that you expect to earn 8% per year. If you plan to retire in 35 years, how big will youexpect that retirement account to be? A. $861,584.02B. $921,597.31C. $972,110.74D. $1,076,980.02

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5 August, 13:11

You started your ﬁrst job after graduating from college. Your company offers a retirement plan for which the companycontributes 25% of what you contribute each year. You expect to contribute $5,000 per year from your salary. You decideto invest the contributions in assets that you expect to earn 8% per year. If you plan to retire in 35 years, how big will youexpect that retirement account to be? A. $861,584.02B. $921,597.31C. $972,110.74D. $1,076,980.02

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Meadow Christian · Answer 1

The correct answer is D.

Explanation:

Giving the following information:

Annual deposit = 5,000*1.25 = $6,250

n = 35 years

i = 0.08 annual

To calculate the future value of the retirement plan, we need to use the following formula:

FV = {A*[ (1+i) ^n-1]}/i

A = annual deposit

FV = {6,250*[ (1.08^35) - 1]}/0.08 = }$1,076,980.02