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Heidi contributes 11% of her monthly salary towards her 401(k) and her employer matches her contribution up to 6% of her salary. If the interest rate of her 401(k) is 6. 25% compounded monthly and her monthly salary is $3,250, determine the amount in her account after 15 years. Round to the nearest cent. A. $164,146. 52 b. $165,001. 45 c. $112,585. 20 d. $113,171. 58.

Respuesta :

The amount that will be in Heidi’s account after 15 years can be calculated using the formula for calculating the Future Value (FV) of an Ordinary Annuity as follows:

FV = M * (((1 + r)^n - 1) / r) ................................. (1)

Where;

FV = Future value of the amount = ?

M = total monthly contribution = Heidi’s monthly contribution of 11% of her monthly salary + Employer monthly contribution of 6% of Heidi’s monthly salary = (11% * Heidi’s monthly salary + 6.25% * Heidi’s monthly salary) = (11% * $3,250) + (6.25% * $3,250) = $552.50

r = Monthly interest rate = Annual interest rate of 401(k) / 12 = 6.25% / 12 = 0.0625 / 12 = 0.00520833333333333

n = number of months = Number of years * 12 = 15 * 12 = 180

Substituting all the values into equation (1), we have:

FV = $552.50 * (((1 + 0.00520833333333333)^180 - 1) / 0.00520833333333333)

FV = $552.50 * 297.097770863934

FV = $164,146.518402324

Rounding to the nearest cent, we have:

FV = $164,146.52

Therefore, the amount that will be in Heidi’s account after 15 years is A. $164,146.52.

Learn more here: https://brainly.com/question/25792915.

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