You just got hired. Congratulations! Your new company has a generous benefit pla

Question

You just got hired. Congratulations! Your new company has a generous benefit plan. To encourage you to save for your retirement, they will match any investment in your 401K that you make. 50 cents on the dollar. Basically, if you save SI.000 they will deposit an addition $500 in your account. Great! They will limit the amount they will deposit to 3% of whatever your annual salary may be. Based on your starting salary, they will deposit S1.500 by the end of your first year. You figure you will get raises each year, so you they should increase the amount that they deposit in that account by $30 every year. Over the course of your working life, you figure you can count on making 5% on that investment. Perform a Future Worth analysis to determine how much the amount the company's contribution will be upon your retirement in 30 years. (Yes, we figure you will retire early and wealthy after having taken this course.) Enter you answer to the nearest whole dollar and do not include the dollar sign (e.g., 328 or 45677)

Explanation / Answer

Future value = A [ (1+i)n - 1]/i

i = 5% = 0.05

n = 30yrs

A = $1500

F = 1500 [ (1+0.05)30 - 1]/0.05

F = 99658.30 dollars

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