If an Employer Matches Contributions to a 401(k) Up to a Maximum

question 6

Multiple Choice

If an employer matches contributions to a 401(k) up to a maximum of $1,800 (employer and employee each contribute $1,800) and an additional $2,200 is contributed by the employee, how much will the employee have in 35 years if the investments in the 401(k) earn an average of 9%?

• A) $152,600
• B) $203,000
• C) $1,251,122
• D) $776,538

---

Definitions:

T-statistic

A type of statistic used in hypothesis testing, calculated by standardizing a sample mean difference given its sample standard deviation.

Standard Error

A statistical measure that quantifies the variability or dispersion of a sample statistic from the population parameter it estimates.

Adjusted R Square

A statistical measure that indicates the proportion of variance in the dependent variable that is predictable from the independent variables, adjusted for the number of predictors in the model.

Parsimony Principle

The Parsimony Principle, often used in scientific research, is the idea that the simplest explanation is usually correct, encouraging minimal assumptions.