Average rate of return

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Reference no: EM133058506

Part a.

If an employee contributes $12,000 per year (assume contributions are at the end of each year) to a 401(k) plan (with no fees), and they earn an average rate of return of 8% per year, how much will this employee have (pre-tax) in their account at the end of 40 years? Show this in a spreadsheet.

Part b.

Further, how much less will the employee have in their account if they pay annual fees that reduce their annual rate of return by 2 percentage points (i.e., from 8% per year to 6% per year). Show these amounts for the end of 40 years. Show this in a spreadsheet.

Please complete each part in a SEPARATE spreadsheet.

Reference no: EM133058506

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