Amy Parker, a 22-year-old and newly hired marine biologist, has opened a 401(k) retirement plan with her employer. Amy's contribution, plus that of her employer, amounts to $2,400 per year starting at age 23. Amy expects this amount to increase by 4% each year until she retires at the age of 57 (there will be 35 EOY payments). What is the compounded future value of Amy's 401(k) plan, in millions of $, if it earns an annual interest rate of 7% per year? ... (a) The compounded future value of Amy's 401(k) plan is $ million. (Round to three decimal places.) (b) What will be the compounded future value if the plan earns an annual interest rate of 4% per year (instead of 7% per year)? $ million. (Round to three decimal places.)
Amy Parker, a 22-year-old and newly hired marine biologist, has opened a 401(k) retirement plan with her employer. Amy's contribution, plus that of her employer, amounts to $2,400 per year starting at age 23. Amy expects this amount to increase by 4% each year until she retires at the age of 57 (there will be 35 EOY payments). What is the compounded future value of Amy's 401(k) plan, in millions of $, if it earns an annual interest rate of 7% per year? ... (a) The compounded future value of Amy's 401(k) plan is $ million. (Round to three decimal places.) (b) What will be the compounded future value if the plan earns an annual interest rate of 4% per year (instead of 7% per year)? $ million. (Round to three decimal places.)
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter27: Time Value Of Money (compound)
Section: Chapter Questions
Problem 6E
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Transcribed Image Text:Amy Parker, a 22-year-old and newly hired marine biologist, has opened a 401(k) retirement plan with her
employer. Amy's contribution, plus that of her employer, amounts to $2,400 per year starting at age 23. Amy expects this
amount to increase by 4% each year until she retires at the age of 57 (there will be 35 EOY payments). What is the
compounded future value of Amy's 401(k) plan, in millions of $, if it earns an annual interest rate of 7% per year?
(a) The compounded future value of Amy's 401(k) plan is $ million. (Round to three decimal places.)
(b) What will be the compounded future value if the plan earns an annual interest rate of 4% per year (instead of 7% per
year)? $ million. (Round to three decimal places.)
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