Gabriella's employer will match her retirement plan contributions up to 6% of her salary. She decides to...

Question

31. Gabriella's employer will match her retirement plan contributions up to 6% of her salary. She decides to invest the maximum amount of 6% of her $84,000 salary in her retirement plan. Find the future value of the annuity in 4 years if it earns 4% interest compounded quarterly.
Use the Future Value of Ordinary Annuity table below.
A) $29,578.91
B) $35,167.23
C) $31,266.78
D) $33,135.09

SnapAndSolve AI · Accepted Answer

Gabriella's annual contribution is 6% of $84,000, which is $5,040. Since the interest is compounded quarterly, the number of periods per year is 4, making a total of 4 x 4 = 16 periods over 4 years. The quarterly interest rate is 4%/4 = 1% or 0.01.

Using the Future Value of Ordinary Annuity table, find the factor for 16 periods at 1% interest, which is 17.008.

Future Value = Contribution per period x Future Value Factor = $5,040 x 17.008 = $85,747.20.

However, this value does not match any of the options given. It seems there might be a discrepancy, so please verify the table values or the options provided.

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Gabriella's employer will match her retirement plan contributions up to 6% of her salary. She decides to...

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