How much would he have saved in 10 years?—By answering the question, you are trying to find out the future value. (Fv)
Trent puts away 10% of his $32,000 (each year) while the company will provide the half which costs $1,600 = providing an amount of $4800 each year.
Fv = Future Value
Pmt = repeated payments
R = interest rate
N = number of payment periods (total)
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Formula:
Fv = Pmt (1 + r/n)^(nt) – 1 / (r/n)
Solution:
Fv = 4800 (1 + 0.073/1)^(1x10) – 1 (0.073/1)
Fv = $67,266.16
Answer: Letter A
