Se Ri Pak, age 23, recently graduated with her bachelor’s degree in library and information sciences. She is about to take her fi rst professional position as an archivist with a civil engineering fi rm in a rapidly expanding area in the U.S. Southwest. While in school, Se Ri worked part time, earning about $8000 per year. For the past two years, she has managed to put $1000 each year into an individual retirement account (IRA). Se Ri owes $15,000 in student loans on which she is obliged now to begin making payments. Her new job will pay $45,000. Se Ri may begin participating in her employer’s 401(k) retirement plan immediately, and she can contribute up to 6 percent of her salary to the plan. Her employer will contribute 1/2 of 1 percent for every 1 percent that Se Ri contributes. Using time value of money considerations to project what her IRA might be worth at age 63?
Se Ri Pak, age 23, recently graduated with her bachelor’s
degree in library and information sciences. She is about
to take her fi rst professional position as an archivist with a
civil engineering fi rm in a rapidly expanding area in the
U.S. Southwest. While in school, Se Ri worked part time,
earning about $8000 per year. For the past two years, she
has managed to put $1000 each year into an individual
retirement account (IRA). Se Ri owes $15,000 in student
loans on which she is obliged now to begin making
payments. Her new job will pay $45,000. Se Ri may begin
participating in her employer’s 401(k) retirement plan
immediately, and she can contribute up to 6 percent of
her salary to the plan. Her employer will contribute 1/2 of
1 percent for every 1 percent that Se Ri contributes.
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