Questions: Supervisor: "The company will match your 401(k) contributions up to the first 6% of your salary." Employee: "That's great! I make 25,000, and contribute 150.00 per month. That means my total contributions including those made by the company will be per month!" 150.00 156.00 275.00 300.00 1,500.00

Supervisor: "The company will match your 401(k) contributions up to the first 6% of your salary."
Employee: "That's great! I make 25,000, and contribute 150.00 per month. That means my total contributions including those made by the company will be per month!"
150.00
156.00
275.00
300.00
1,500.00

Transcript text: Supervisor: "The company will match your $401(k)$ contributions up to the first $6 \%$ of your salary." Employee: "That's great! I make $\$ 25,000$, and contribute $\$ 150.00$ per month. That means my total contributions including those made by the company will be $\qquad$ per month!" $\$ 150.00$ $\$ 156.00$ $\$ 275.00$ $\$ 300.00$ $\$ 1,500.00$

Solution

Solution Steps

Step 1: Determine the Company's Contribution

The company matches the employee's contributions up to the first 6% of the employee's salary. First, we need to calculate what 6% of the employee's salary is.

The employee's annual salary is \$25,000. Therefore, 6% of the salary is:

\[ 0.06 \times 25,000 = 1,500 \]

This is the maximum amount the company will match annually. To find the monthly match, we divide by 12:

\[ \frac{1,500}{12} = 125 \]

Step 2: Calculate Total Monthly Contributions

The employee contributes \$150.00 per month. The company matches up to \$125.00 per month (as calculated in Step 1). Therefore, the total monthly contributions, including the company's match, are:

\[ 150 + 125 = 275 \]