Response to the following problem:
Using the information in Problem 1, and assuming all variables remain constant over the next 25 years, what will your 401(k) fund value be in 25 years (when you expect to retire)?
Problem 1:
Your company sponsors a 401(k) plan into which you deposit 12 percent of your $60,000 annual income. Your company matches 50 percent of the first 5 percent of your earnings. You expect the fund to yield 10 percent next year. If you are currently in the 31 percent tax bracket, what is your annual investment in the 401(k) plan and your one year return?