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19 April, 20:31

Trent is 25 years old and works for a company that matches his 401 (k) contribution up to 5%. the interest rate for his 401 (k) is 7.3%. if he puts away 10% of his $32,000 salary every year, how much would he have saved in 10 years? round your answer to the nearest cent.

a. $67,266.16

b. $72,176.59

c. $33,250.60

d. $35,677.89

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  1. 19 April, 20:34
    0
    How much would he have saved in 10 years?-By answering the question, you are trying to find out the future value. (Fv)

    Trent puts away 10% of his $32,000 (each year) while the company will provide the half which costs $1,600 = providing an amount of $4800 each year.

    Fv = Future Value

    Pmt = repeated payments

    R = interest rate

    N = number of payment periods (total)

    --

    Formula:

    Fv = Pmt (1 + r/n) ^ (nt) - 1 / (r/n)

    Solution:

    Fv = 4800 (1 + 0.073/1) ^ (1x10) - 1 (0.073/1)

    Fv = $67,266.16

    Answer: Letter A
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