How much will Sienna have in her retirement account in 20 years if her contribut

Question

How much will Sienna have in her retirement account in 20 years if her contribution is $9,100 per year and the annual return on the account is 7%

How much of the retirement fund represents interest and gains (in excess of contributions) earned?

Addison earns $55,000 per year. What retirement plan should Addison consider if he owns a small firm with employees?

What retirement plan should Addison consider if he works for a large private firm?

What retirement plan should Addison consider if he works at a university?

Explanation / Answer

1. Sienna contributes $9100 per year for 20 years @ 7 % interest

therefor compounted interest =

F = P*Annuity value fo 20 years @ 7% inteset

where

F = future value
P = present value

F= 9100(42.7951)

= 389435

The retirement fund represent interest value of $207435 (389435-(9100-20)

2.

A. if he owns a small business firm SIMPLE IRA plan is more preferable

B. If h is working in large private frm the following plans are suitable

-

SEP: Simplified Employee Pension Plan
-401(k) Plans
-SIMPLE: Savings Incentive Match Plan

CIf he works at university Simple savings employee pension scheem is good

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