document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1101867>Question 1101867</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Suppose that between the ages of 22 and 32&#8203;, you contribute &#8203;$5000 per year to a&#8203; 401(k) and your employer contributes &#8203;$2500 per year on your behalf. The interest rate is 8.7&#8203;% compounded annually. What is the value of the&#8203; 401(k) after 10 &#8203;years? b. Suppose that after 10 years of working for this&#8203; firm, you move on to a new job.&#8203; However, you keep your accumulated retirement funds in the&#8203; 401(k). How much money will you have in the plan when you reach age&#8203; 65? c. What is the difference between the amount of money you will have accumulated in the&#8203; 401(k) and the amount you contributed to the&#8203; plan? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #716602 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=716602\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> \r<BR>\n" );
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document.write( "32 - 22 = 10 years of payments.<BR>\n" );
document.write( "65 - 32 = 33 years of investing the future value of the payments.\r<BR>\n" );
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document.write( "i used a financial calculator to get your results.\r<BR>\n" );
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document.write( "the financial calculator i used is the TI-BA-II-Plus\r<BR>\n" );
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document.write( "for the first part of your problem i did the following:\r<BR>\n" );
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document.write( "n = 10<BR>\n" );
document.write( "i/y = 8.7<BR>\n" );
document.write( "pv = 0<BR>\n" );
document.write( "pmt = -7500<BR>\n" );
document.write( "fv = 0\r<BR>\n" );
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document.write( "n is the number of years.<BR>\n" );
document.write( "i/y is the interest rate percent per year.<BR>\n" );
document.write( "pv is the present value of the investment.<BR>\n" );
document.write( "pmt is the value of the investments made at the end of each year.<BR>\n" );
document.write( "fv is the future value of the investment.\r<BR>\n" );
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document.write( "i then calculated fv and got $112,328.2732\r<BR>\n" );
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document.write( "$7,500 invested into our account at the end of each year yields a future value of $112,325,2732 at the end of the 10 year investment period.\r<BR>\n" );
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document.write( "for the second part of your problem i did the following:\r<BR>\n" );
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document.write( "n = 33<BR>\n" );
document.write( "i/y = 8.7<BR>\n" );
document.write( "pv = -112,325.2732<BR>\n" );
document.write( "pmt = 0<BR>\n" );
document.write( "fv = 0\r<BR>\n" );
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document.write( "n is the number of years.<BR>\n" );
document.write( "i/y is the interest rate percent per year.<BR>\n" );
document.write( "pv is the present value of the investment which is the future value of investments made for the previous 10 years.<BR>\n" );
document.write( "pmt is the amount invested at the end of each year which is 0 in this case.<BR>\n" );
document.write( "fv is the future value of the investment.\r<BR>\n" );
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document.write( "i then calculated fv and got $1,762,235.873\r<BR>\n" );
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document.write( "if i understand what is being asked is correct, then your solution is:\r<BR>\n" );
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document.write( "your contribution was $5,000 a year for 10 years.<BR>\n" );
document.write( "that's a total contribution of $50,000.\r<BR>\n" );
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document.write( "the difference between the amount you accumulated in the 401k and the amount that you contributed is $1,762,235.873 - $50,000 = $1,712,235.873.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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