Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please show the steps An employee contributes $16,000 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $1,600.
Please show the steps
An employee contributes $16,000 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $1,600. The employee can allocate the contributions among equities (earning 13 percent annually), bonds (earning 6 percent annually), and money market securities (earning 4 percent annually). The employee expects to work at the company 15 years. The employee can contribute annually along one of the three following patterns: Equities Bonds Money market securities Option 1 60% 40 Option 2 50% 45 5 100% Option 3 40% 50 10 100% 100% Calculate the terminal value of the 401(k) plan for each of the 3 options, assuming all returns and contributions remain constant over the 15 years. (Do not round intermediate calculations. Round your answers to the nearest whole number. (e.g., 32)) Answer is complete but not entirely correct. Option 1 Option 2 Option 3 $ 568,141 S 533,284 $ 445,692Step 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