Employer offers a tax-deferred retirement plan

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Your employer offers a tax-deferred retirement plan (401-b plan) which would permit you to invest a tax-free until you retire, up to 15 percent of your salary. Once you are out of the EMBA (one year from today) you figure you can save $5000 every 6 months. The insurance company which manages the retirement fund promises to pay an effective interest rate (EAR) of 10 percent. If you invest $5000 every six months, starting six months after you graduate (or 18 months from now), how much will you have after contributing for 5 years in your retirement plan?

Reference no: EM131412886

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