Problem 18-7 Calculating an IRA Accumulation [LO18-5] 18 Janine is 40 and has a good job at a biotechnology company. Janine estimates that she will need $974,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of $22,500 a year. (She expects that Social Security will pay her an additional $16,500 a year.) She currently has $7,500 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. How much money will Janine have to accumulate in her company's 401(k) plan over the next 25 years in order to reach her retirement income goal? Use Exhibit 1-A. (Round time value factor to 3 decimal places. Round intermediate and final answer to 2 decimal places.) 401(k) accumulation eBook Print References 0.83 points Exhibit 1-A Future value (compounded sum) of $1 after a given number of time periods Period 1% 2% 3% 4% 5% 6% 1 1.010 1.020 1.030 1.061 1.040 1.082 1.050 1.103 1.020 1.040 1.030 1.061 1.093 1.125 1.158 1.041 1.082 1.126 1.170 1.216 1.051 1.104 1.159 1.217 1.276 1.062 1.126 1.194 1.265 1.340 1.072 1.149 1.230 1.316 1.407 1.083 1.172 1.267 1.369 1.477 1.094 1.195 1.305 1.423 1.551 1.105 1.219 1.344 1.480 1.629 1.116 1.243 1.384 1.539 1.710 1.127 1.268 1.426 1.601 1.796 1.138 1.294 1.469 1.665 1.886 1.149 1.319 1.513 1.732 1.980 1.161 1.346 1.558 1.801 2.079 1.173 1.373 1.605 1.873 2.183 1.184 1.400 1.653 1.948 2.292 1.196 1.428 1.702 2.026 2.407 1.208 1.457 1.754 2.107 2.527 1.220 1.486 1.806 2.191 2.653 1.282 1.641 2.094 2.666 3.386 1.348 1.811 2.427 3.243 4.322 1.489 2.208 3.262 4.801 7.040 1.645 2.692 4.384 7.107 11.467 1.120 1.130 1.140 1.150 1.160 1.254 1.277 1.300 1.323 1.346 1.405 1.443 1.482 1.521 1.561 1.574 1.630 1.689 1.749 1.811 1.762 1.842 1.925 2.011 2.100 1.974 2.082 2.195 2.313 2.436 2.211 2.353 2.502 2.660 2.826 2.476 2.658 2.853 3.059 3.278 2.773 3.004 3.252 3.518 3.803 3.106 3.395 3.707 4.046 4.411 3.479 3.836 4.226 4.652 5.117 3.896 4.335 4.818 5.350 5.936 4.363 4.898 5.492 6.153 6.886 4.887 5.535 6.261 7.076 7.988 5.474 6.254 7.138 8.137 9.266 6.130 7.067 8.137 9.358 10.748 6.866 7.986 9.276 10.761 12.468 7.690 9.024 10.575 12.375 14.463 8.613 10.197 12.056 14.232 16.777 9.646 11.523 13.743 16.367 19.461 17.000 21.231 26.462 32.919 40.874 29.960 39.116 50.950 66.212 85.850 93.051 132.782 188.884 267.864 378.721 289.002 450.736 700.233 1083.657 1670.704 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 40 50 Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25 30 40 50 12% 13% 14% 15% 16% 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 1.898 2.012 2.133 2.261 2.397 2.540 2.693 2.854 3.026 3.207 4.292 5.743 10.286 18.420 1.170 1.369 1.602 1.874 2.192 2.565 3.001 3.511 4.108 4.807 5.624 6.580 7.699 9.007 10.539 12.330 14.426 16.879 19.748 23.106 50.658 111.065 533.869 2566.215 17% 7% 1.070 1.145 1.225 1.311 1.403 1.501 1.606 1.718 1.838 1.967 2.105 2.252 2.410 2.579 2.759 2.952 3.159 3.380 3.617 3.870 5.427 7.612 14.974 29.457 1.180 1.392 1.643 1.939 2.288 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 14.129 16.672 19.673 23.214 27.393 62.669 143.371 750.378 3927.357 18% 8% 1.080 1.166 1.260 1.360 1.469 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 3.426 3.700 3.996 4.316 4.661 6.848 10.063 21.725 46.902 1.190 1.416 1.685 2.005 2.386 2.840 3.379 4.021 4.785 5.695 6.777 8.064 9.596 11.420 13.590 16.172 19.244 22.901 27.252 32.429 77.388 184.675 1051.668 5988.914 19% 9% 10% 20% 1.090 1.100 1.110 1.188 1.210 1.232 1.295 1.331 1.368 1.412 1.464 1.518 1.539 1.611 1.685 1.677 1.772 1.870 1.828 1.949 2.076 1.993 2.144 2.305 2.172 2.358 2.558 2.367 2.594 2.839 2.580 2.853 3.152 2.813 3.138 3.498 3.066 3.452 3.883 3.342 3.797 4.310 3.642 4.177 4.785 3.970 4.595 5.311 4.328 5.054 5.895 4.717 5.560 6.544 5.142 6.116 7.263 5.604 6.727 8.062 8.623 10.835 13.585 13.268 17.449 22.892 31.409 45.259 65.001 74.358 117.391 184.565 1.200 1.250 1.300 1.440 1.563 1.690 1.728 1.953 2.197 2.074 2.441 2.856 2.488 3.052 3.713 2.986 3.815 4.827 3.583 4.768 6.275 4.300 5.960 8.157 5.160 7.451 10.604 6.192 9.313 13.786 17.922 7.430 11.642 8.916 14.552 23.298 10.699 18.190 30.288 12.839 22.737 39.374 15.407 28.422 51.186 18.488 35.527 66.542 22.186 44.409 86.504 26.623 55.511 112.455 31.948 69.389 146.192 38.338 86.736 190.050 95.396 264.698 705.641 237.376 807.794 2619.996 1469.772 7523.164 36118.865 9100.438 70064.923 497929.223 11% 25% 30%