Your mother's employer offers a tax-deferred retirement plan (a 401-b plan,which was authorized by Congress to encourage savings)which would permit her to invest,tax-free until she retires,up to 15 percent of her salary.Once you are out of school (one year from today),she figures she can save $1,000 every 6 months,or $2,000 per year.The insurance company which manages the retirement fund promises to pay a stated (or simple)rate of 12 percent per year,but with quarterly compounding.If your mother invests $1,000 each six months,starting six months after you graduate (or 18 months from today),how much will she have 5 years from now,assuming the last payment is made at the end of Year 5? (Hint: She will make a total of 8 payments. )

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The Answer of Your mother's employer offers a tax-deferred retirement plan (a 401-b plan,which was authorized by Congress to encourage savings)which would permit her to invest,tax-free until she retires,up to 15 percent of her salary.Once you are out of school (one year from today),she figures she can save $1,000 every 6 months,or $2,000 per year.The insurance company which manages the retirement fund promises to pay a stated (or simple)rate of 12 percent per year,but with quarterly compounding.If your mother invests $1,000 each six months,starting six months after you graduate (or 18 months from today),how much will she have 5 years from now,assuming the last payment is made at the end of Year 5? (Hint: She will make a total of 8 payments. )

Your Mother's Employer Offers a Tax-Deferred Retirement Plan (A 401-B