Answered

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Question 1(Multiple Choice Worth 4 points)

(Retirement Savings Plans MC)

An employee is considering two job offers.

First offer: $67,000 yearly salary with 100% matching up to 5% of yearly salary 401(k) plan
Second offer: $73,000 yearly salary with 75% matching up to 4% of yearly salary 401(k) plan

The employee plans to stay at either job for at least 12 years, assumes there are no salary increases, and will
make 401(k) contributions at the same rate the company matches. After 12 years, with an assumed average
annual growth rate of 5%, the first job offer will have an estimated 401(k) balance of $106,644.75.

Which job offer will have the higher 401(k) balance after 12 years, and by how much?

The second job offer has a higher 401(k) balance by $13,688.73.
The first job offer has a higher 401(k) balance by $13,688.73.
The second job offer has a higher 401(k) balance by $36,927.73.
The first job offer has a higher 401(k) balance by $36,927.73.

Sagot :

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