An employee contributes 15 000 to a 401 k plan each
An employee contributes $ 15,000 to a 401(k) plan each year, and the company matches 10 percent of this annually, or $ 1,500. 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 20 years. The employee can contribute annually along one of the three following patterns:


Calculate the terminal value of the 401(k) plan for each of the 3 options, assuming all returns and contributions remain constant over the 20years.
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