Reference no: EM132775349

An employee contributes $16,300 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $1,630. The employee can allocate the contributions among equities (earning 12 percent annually), bonds (earning 5 percent annually), and money market securities (earning 3 percent annually). The employee expects to work at the company 15 years.

The employee can contribute annually along one of the three following patterns:

                Option 1            Option 2           Option 3
Equities         60%                 50%               40%
Bonds            40                    45                  50
Money market securities 0         5                  10
100% 100% 100%

Problem 1: Calculate the terminal value of the 401(k) plan for Option 3, assuming all returns and contributions remain constant over the 15 years. (Do not round intermediate calculations. Round your answers to the nearest whole number. (e.g., 32))