Question
Your mother's employer offers a tax-deferred retirement plan ( a 401-b plan, which was authorized by Congress to encourage savings) which would permit her to
Your mother's employer offers a tax-deferred retirement plan ( a 401-b plan, which was authorized by Congress to encourage savings) which would permit her to invest, tax-free until she retires, up to 15% of her salary. Once you are out of school (1 year from today), she figures she can save $1,000 every six months, or $2,000 a year. The insurance company which manages the retirement fund promises to pay a stated (or nominal) rate of 12% per year, but with quarterly compounding. If your mother invest $1,000 each six months after you graduate (or 18 months from today), how much will she have 5 yars from now, assuming the last payment is made at the end of year 5? (Hint: 8 total payments.)
$12,300 | ||
$12,462 | ||
$9,897 | ||
$9,929 | ||
$10,000 |
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