Answer:
Explanation:
To calculate the future value of Francine's 401k account in 10 years, considering an annual contribution of $8,000 and an average annual return of 4%, we can use the formula for the future value of a series of regular payments, also known as an annuity.
The formula for the future value of an annuity is:
FV = P * [(1 + r)^n - 1] / r
Where:
FV is the future value
P is the payment amount
r is the interest rate per period
n is the number of periods
In this case:
P = $8,000 (annual contribution)
r = 4% or 0.04 (annual interest rate)
n = 10 (number of years)
Calculating the future value:
FV = $8,000 * [(1 + 0.04)^10 - 1] / 0.04
FV = $8,000 * (1.04^10 - 1) / 0.04
FV ≈ $8,000 * (1.480244 - 1) / 0.04
FV ≈ $8,000 * 0.480244 / 0.04
FV ≈ $8,000 * 12.0061
FV ≈ $96,048.80
Therefore, Francine will have approximately $96,048.80 in her 401k account in 10 years if the account averages a 4% annual return and she contributes $8,000 each year.