Question

Lauren will make annual contributions in the amount of $4,770, on average, to a 401(k) over the next 34 years. Her employer will match 60% of her contributions. She is currently being taxed at 33%, but anticipates being taxed at 15% upon retirement. If her account grows at an average rate of 5.5% annually, what is the value of Lauren’s 401(k) upon retirement?

$381,435.69

$395,228.47

$481,057.72

$610,297.11

Answer 1

5.5% annually

Answer 2

$4,770

Answer 3

34 years.

Answer 4

@SolomonZelman

Answer 5

FVOA=4770*((1+0.055)^(1*34)-1))/(0.055) ?

Answer 6

then 5.5% - 4770 - 34 ?

Answer 7

@turtleluver

Answer 8

@robtobey

Answer 9

is this the equation for 'uniform series payments'?
FVOA=4770*((1+0.055)^(1*34)-1))/(0.055) ?

Answer 10

if so, then you are doing it correctly ^_^

Answer 11

@DemolisionWolf I got 448747.87 what do I do next o.o

Answer 12

@Dogpile
so ur equatoin is the one for uniform series then? not single payment or gradient series

Answer 13

I think soo I dont really know o.O

Answer 14

it's been a while since i have used that equatoin lemme look..

Answer 15

ok :3

Answer 16

this is the same one right?
\[F=A \frac{ (1+i)^n - 1 }{ i}\]
[F=A \frac{ (1+i)^n - 1 }{ i}\]

Answer 17

o.o no thats a different formula

Answer 18

like this right? (its the same)
\[FVOA=4770\frac {((1+0.055)^{1*34}-1))}{(0.055)}\]

Answer 19

Perfect http://www.wolframalpha.com/input/?i=F%3D4770%281%2B0.055%29%5B%28%281%2B0.055%29%5E%281%29-%281%29%29%2F%280.055%29%5D

Answer 20

http://www.wolframalpha.com/input/?i=F%3D4770%5B%28%281%2B0.055%29%5E%281%29-%281%29%29%2F%280.055%29%5D

Answer 21

yaya, the second one

Answer 22

so, we have to fix the A term you have.
the phrase, " Her employer will match 60% of her contributions."
means A = 4770 + 4770(.6)

Answer 23

how does this play into our equation? i'm a bit hesitant about it, "She is currently being taxed at 33%, but anticipates being taxed at 15% upon retirement. "

Answer 24

I think your suppose to ignore because questions like these tend to want to throw you off :/

Answer 25

i'm with you on this one!

because also, the money she is putting in every year should have already been taxed, and the 4770 is what is remaining.

so now we have:
\[F=(4770+(.6)4770) \frac{ (1+0.055)^{34} - 1 }{ 0.055}\]


**[F=(4770+(.6)4770) \frac{ (1+0.055)^{34} - 1 }{ 0.055}\]

Answer 26

whad u get for FVOA, or as I call it, F?

Answer 27

http://www.wolframalpha.com/input/?i=FVOA%3D7632*%28%281%2B0.055%29%5E%281*34%29-1%29%29%2F%280.055%29

Answer 28

thats what I get too. ^_^

Answer 29

What we do next ?

Answer 30

FVOA = 71,7996.59

and we have:
$381,435.69
$395,228.47
$481,057.72
$610,297.11
to pick from...

what did we do wrong...
I wonder if the 'tax' part needs to be in this

Answer 31

I think sooo you know how to put them in the problem ?

Answer 32

gosh, I can't figure this one out..