Stephanie is going to contribute $160 on the first of each month, starting today, to her retirement account. Her employer will provide a match of 50 percent. In other words, her employer will add $80 to the amount Stephanie saves. If both Stephanie and her employer continue to do this and she can earn a monthly interest rate of .45 percent, how much will she have in her retirement account 35 years from now?

Explanation:

Principal Payment $160

Her Employee help to add $80

Total principal is (160+80)= $240

At a rate of 0.45

For a time of 35years

We will compound her amount

Using compound interest formula

A=P(1+r/n)^nt

Where,

P = principal amount = $240

r = annual rate of interest =0.45

t = number of years the amount invested =35years

A = amount of money accumulated after n years, including interest.

n = number of times the interest is compounded per year=12months

Therefore,

A=P(1+r/n)^nt

A=240(1+0.43/12)^35×12

A=240(1+0.03583)^420

A=240(1.03583)^420

A=240×2.641

A=$633.814

The amount is approximately $633.814

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