You started your first job after graduating from college. Your company offers a retirement plan for which the company contributes 50 percent of what you contribute each year. You expect to contribute $4,000 per year from your salary. You decide to invest the contributions in assets that you expect to earn 8 percent per year. If you plan to retire in 35 years, how big will you expect that retirement account to be?
A) $689,267.21
B) $823,147.29
C) $1,033,900.82
D) $1,308,427.41

Question

Quizplus · Accepted Answer

The correct answer is found by calculating the future value of the annual contributions using the formula for the future value of an annuity. Since the company matches 50% of the $4,000 contribution, the total annual contribution is $6,000. Using an 8% annual return over 35 years, the future value can be calculated, which matches closest to option C, $1,033,900.82.

You Started Your First Job After Graduating from College