Let's say you earned an average of $46,000 per year in the first 10 years of your career

Finance Dec 19, 2020

Let's say you earned an average of $46,000 per year in the first 10 years of your career. Your employer was willing to match 50% of your 401k contributions up to 6% of your salary. You decided to contribute 4%. Assuming you have an annual rate of return of 10% (which is a reasonable rate of growth for mutual fund equity investments) how much money will you have after 10 years?

Expert Solution

Own contributions=46000*4%=1840.00

Employer contributions=46000*4%*50%=920.00

Total contributions=1840.00+920.00=2760.00

Future Value=Future Value of annuity=Annuity/rate*((1+rate)^n-1)=2760.00/10%*(1.1^10-1)
=43987.29190

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