Answered step by step
Verified Expert Solution
Question
1 Approved Answer
510 The Sampsons-A Continuing Case: Chapter 19 NAME DATE MyLab Finance Dave's employer offers a 401(k) plan, but Dave has not participated in it up
510 The Sampsons-A Continuing Case: Chapter 19 NAME DATE MyLab Finance Dave's employer offers a 401(k) plan, but Dave has not participated in it up to this point. Now he wants to seriously consider contributing. His employer will allow him to invest about $7,000 of his salary per year and match his contribution up to $3,000, for a total contribution of $10,000 per year. The retirement funds will be invested in one or more mutual funds. Dave's best guess is that the retirement fund investments will earn a return of 7% per year. 1. If Dave and his employer contribute a total of $10,000 annually, how much will be in the account in thirty years, when Dave and Sharon hope to retire? Future Value of an Annuity Contribution Years Annual Rate of Return Future Value $10,000 30 7% 2. If Dave contributes $7,000 per year to his retirement account, the Sampsons will have less disposable income, and therefore will have lower cash inflows as a result. Suggest some ways that the Sampsons may be able to offset the reduction in cash inflows by reducing cash outflows (look back at their cash outflows in Chapter 20)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started