4
QuizMultiple Choice

Retirement Savings Options

Question 4 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Heidi contributes 11% of her monthly salary towards her 401(k) and her employer matches her contribution up to 6% of her salary. If the interest rate of her 401(k) is 6.25% compounded monthly and her monthly salary is $3,250, determine the amount in her account after 15 years. Round to the nearest cent.

Answer
A
$164,146.52
B
$165,001.45
C
$112,585.20
D
$113,171.58

Explanation

Heidi contributes 11% of $3,250, or $357.50 per month. Her employer adds a match of 6% of $3,250, which is $195, so the total monthly contribution is $552.50. Using the monthly rate 0.0625 ÷ 12 and 15 × 12 = 180 deposits, the future value of the monthly contributions is about $164,146.52. The best answer is $164,146.52.

AI-written and checked against the verified answer.

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