BUSINESS COLLEGE

Your company sponsors a 401(k) plan into which you deposit 10 percent of your $123,000 annual income. Your company matches 75 percent of the first 10 percent of your earnings. You expect the fund to yield 12 percent next year. Assume you are currently in the 31 percent tax bracket. a. What is your annual investment in the 401(k) plan? (Round your answer to the nearest whole number. (e.g., 32))b. What is your one-year return?

Answers

Answer 1
Answer:

Answer:

A) Your own Contribution in 401(K) is $12,000.

B) Total Value of fund after one year = $21,000 × (1 + 12%)

= $23,520.

Explanation:

A) Total Annual Income = $120,000

Contribution in 401(K) = 10% of income  

= $120,000 × 10%

= $12,000

your own Contribution in 401(K) is $12,000.

Employee contribution after tax = $12,000 × (1 31%)

= $8,280

Contribution of employer = $12,000 × 75%

= $9,000

Total Contribution = $12,000 + $9,000

= $21,000

Total Contribution in one year is $12,000.

Yield on fund = 12%

Total Value of fund after one year = $21,000 × (1 + 12%)

= $23,520.

after tax return = ($23,520 -$8,280) / $8,280

= 184%

After tax return is 184%.

You don't have to pay that income tax until you withdraw the money
Answer 2
Answer:

Final answer:

The annual investment in the 401(k) plan is $21,525, comprising $12,300 from your contribution and $9,225 from your company's match. The one-year return, counting an expected yield of 12%, would be $24,108.

Explanation:

The annual investment in the 401(k) plan is calculated by finding 10% of the annual income of $123,000 which amounts to $12,300. The company then matches 75% of this investment. So, the company contribution is 0.75 * $12,300 = $9,225. Therefore, the total annual investment into the 401(k) plan is $12,300 (your contribution) + $9,225 (company’s contribution) = $21,525.

Your one-year return would be the total investment in the fund, including the expected 12% yield next year. So that's $21,525 * 1.12 = $24,108.

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Answers

Answer:

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Explanation:

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Answers

Answer:

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Answer:

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Answers

Answer:

C

Explanation:

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Answers

Answer:

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Explanation:

Following the stated assumptions in the question, the money multiplier will be used to calculate the resulting effect of the $500,000 injection into the money supply.

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Answers

Answer:

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Explanation:

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Answers

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