Question

29. At the end of this month, Bryan will start saving $80 a month for retirement through his company's retirement plan. His employer will contribute an additional $.25 for every $1.00 that Bryan saves. If he is employed by this firm for 25 more years and earns an average of 11 percent on his retirement savings, how much will Bryan have in his retirement account 25 years from now?
a. $126,090.66
b. $127,246.50
c. $157,613.33
d. $159,058.12
e. $165,494.00

Please break down answer using a financial calculator. I am having a hard time understanding which keys to use!

Answer 1

Given that,

Bryan will start saving $80 at the end of each month

For every $1 of his saving, his employer will contribute $0.25

So, for $80 of his saving, employer will contribute 0.25*80 = $20

So, monthly contribution = $100

interest rate = 11% compounded monthly

Total years on contribution = 25 years

So, total month of payment = 25*12 = 300 month

On financial calculator use following value to compute future value at retirement

PV = 0

N = 300

PMT = 100

I/Y = 11/12 = 0.9167

compute for FV, we get FV = -157613.33

=> Bryan will have $157613.33 at his retirement

Option c is correct.