Stephanie is going to contribute $160 on the first of each month, starting today, to her retirement account. Her employer will provide a match of 50 percent. In other words, her employer will add $80 to the amount Stephanie saves. If both Stephanie and her employer continue to do this and she can earn a monthly interest rate of .45 percent, how much will she have in her retirement account 35 years from now?

Question

Quizplus · Accepted Answer

This is a problem involving the future value of a series of annuities with additional contributions. Stephanie contributes $160, and her employer adds another $80, making the total monthly contribution $240. Given a monthly interest rate of 0.45% over 35 years (or 420 months), the future value can be calculated using the formula for the future value of an annuity. The correct calculation leads to the answer provided in option E, $299,547.97, when accounting for both the contributions and the interest earned over time.

Stephanie Is Going to Contribute $160 on the First of Each