Suppose you are paid $2,500 per month and your employer's 401(k) matches your contributions by 20% up to a maximum of 5% of your pay. Assuming you max-out your retirement savings and you work for 5 years, how much will the 401(k) be worth when you retire (if you can get an APR of 8.5% during your work years)? 2$ Number Round your answer to 2 decimal places.
Suppose you are paid $2,500 per month and your employer's 401(k) matches your contributions by 20% up to a maximum of 5% of your pay. Assuming you max-out your retirement savings and you work for 5 years, how much will the 401(k) be worth when you retire (if you can get an APR of 8.5% during your work years)? 2$ Number Round your answer to 2 decimal places.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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![**Problem Statement:**
Suppose you are paid $2,500 per month and your employer’s 401(k) matches your contributions by 20% up to a maximum of 5% of your pay. Assuming you max-out your retirement savings and you work for 5 years, how much will the 401(k) be worth when you retire (if you can get an APR of 8.5% during your work years)?
**Input Required:**
- Enter the calculated 401(k) amount in the provided box.
- Round your answer to 2 decimal places.
**Instructions:**
1. **Calculate Your Monthly Contribution:**
- Determine 5% of your monthly pay: \( 0.05 \times 2,500 = 125 \)
- This is the maximum amount eligible for the employer match.
2. **Employer Contribution:**
- Calculate 20% of your contribution: \( 0.20 \times 125 = 25 \)
3. **Total Monthly Contribution:**
- Sum your contribution and the employer's: \( 125 + 25 = 150 \)
4. **Annual Interest Rate:**
- Use an APR of 8.5%.
5. **Total Value Over 5 Years:**
- Use the future value of a series formula to determine the 401(k)'s worth over 5 years, given the monthly contributions and the APR.
**Calculation and Answer Box:**
- Enter the final calculated 401(k) value in the answer box provided, ensuring it is rounded to 2 decimal places.
[Note: This example assumes no withdrawals or changes in contribution rates occur during the 5 years.]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa09f307f-04d5-4618-93d9-6eea7402ef4b%2F505a306c-9141-4d68-849e-f4bdd4accdaa%2Favdj81i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Problem Statement:**
Suppose you are paid $2,500 per month and your employer’s 401(k) matches your contributions by 20% up to a maximum of 5% of your pay. Assuming you max-out your retirement savings and you work for 5 years, how much will the 401(k) be worth when you retire (if you can get an APR of 8.5% during your work years)?
**Input Required:**
- Enter the calculated 401(k) amount in the provided box.
- Round your answer to 2 decimal places.
**Instructions:**
1. **Calculate Your Monthly Contribution:**
- Determine 5% of your monthly pay: \( 0.05 \times 2,500 = 125 \)
- This is the maximum amount eligible for the employer match.
2. **Employer Contribution:**
- Calculate 20% of your contribution: \( 0.20 \times 125 = 25 \)
3. **Total Monthly Contribution:**
- Sum your contribution and the employer's: \( 125 + 25 = 150 \)
4. **Annual Interest Rate:**
- Use an APR of 8.5%.
5. **Total Value Over 5 Years:**
- Use the future value of a series formula to determine the 401(k)'s worth over 5 years, given the monthly contributions and the APR.
**Calculation and Answer Box:**
- Enter the final calculated 401(k) value in the answer box provided, ensuring it is rounded to 2 decimal places.
[Note: This example assumes no withdrawals or changes in contribution rates occur during the 5 years.]
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