Question

Bonnie and Clyde want to take a six-month leave of absence from their jobs to travel extensively in South America. Rounded to the next higher month, how long will it take them to save $40,000 for the leave if they make month-end contributions of $700 to their employer's salary deferral plan? The salary deferral plan earns 7.5% compounded semiannually.

Answer 1

• As per above table, we can see that after 48 months, Bonnie and Clyde could be able save $39,795.11 which is near to $40,000 for their travell needs.
• 6 monthly Interest rate will be 7.5%/2.