Use the Table Below to Answer the Following Questions) -What Will Be the Amount of Employee Contribution to Retirement

question 57

Multiple Choice

Use the table below to answer the following questions) .
Sheila joined Simsin Tradings at the age of 36 with a starting salary of $75,000. She expects a salary increase of 5 percent every year. Her retirement plan requires her to pay 9 percent of her salary, while the company matches it at 32 percent. She expects an annual return of 7 percent on her retirement portfolio. Using a predictive model for Sheila's first five years, calculate the following, assuming that the salary increases at the same rate every year, and the return of interest does not change. $\begin{array} { |l|l| } \hline \text {Retir ement Plan Model for Sheila }\\\hline\\\hline \text { Data }\\\hline\\\hline \text { Retirement Contribution percent of salary) } & 9 \text { percent } \\\hline \text { Employer Match } & 32 \text { percent } \\\hline \text { Annual Salary Increase } & 5 \text { percent } \\\hline \text { Annual Return on Investment } & 7 \text { percent } \\\hline\end{array}$

-What will be the amount of employee contribution to retirement plan when Sheila has reached the age of 38?

• A) $7,441.88
• B) $7,813.97
• C) $24,450
• D) $2381.40

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Definitions:

Sinking Fund

A savings account or fund dedicated to paying off debt or a bond, where money is set aside over time to manage future repayment obligations.

Depreciating Equipment

Equipment or machinery that decreases in value over time due to use, wear and tear, or obsolescence.

Technological Innovation

The development and application of new technologies and ideas to improve goods, services, or processes, enhancing efficiency or value.

Output

Total quantity of a product or service produced within a given timeframe, reflecting the overall production capacity.