Consider that you are 30 years old and have just changed to a new job. You have $91,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $4,800 each year into your new employer's plan. If the rolled-over money and the new contributions both earn a 7 percent return, how much should you expect to have when you retire in 38 years?
A) $2,012,560.60
B) $2,018,506.60
C) $2,106,718.60
D) $2,216,781.60

Question

Quizplus · Accepted Answer

The future value of the rolled-over amount and the annual contributions can be calculated separately and then summed. The rolled-over amount grows to $91,000 * (1 + 0.07)^38. The future value of the annual contributions is calculated using the future value of an annuity formula: $4,800 * [(1 + 0.07)^38 - 1] / 0.07. Adding these two amounts gives the total expected amount at retirement.

Consider That You Are 30 Years Old and Have Just