At the end of this month,Les will start saving $150 a month for retirement through his company's superannuation plan.His employer will contribute an additional $0.50 for every $1.00 that he saves.If he is employed by this firm for 30 more years and earns an average of 10.5 per cent on his retirement savings,how much will Les have in his superannuation account 30 years from now?

Question

Quizplus · Accepted Answer

Les will contribute $150 a month to his superannuation plan, which would be $1,800 per year. His employer will contribute an additional 50% of the amount that he saves, so this is an additional contribution of $900 per year. Thus, his total annual contribution will be $2,700.

If Les contributes $2,700 per year for 30 years and earns an average of 10.5% per year on his savings, his superannuation account will be worth:

$2,700 x ((1 + 0.105)^30 - 1) / 0.105 = $566,190.22

Therefore, the best answer is (D).

At the End of This Month,Les Will Start Saving $150