# Thread: 401 (k) formula?

1. ## 401 (k) formula?

I've been working on a formula for a 401k program for hours and it doesn't really make sense to me. http://www.bankrate.com/calculators/...alculator.aspx the closest thing that i came up with is FV=PV*(((1+i)^years)-1/i) or 6000*((((1+.08))^35)-1/.8 6000 is added for the first year idk how to get 1000 that was previously in there to be added in also. I need the equation to work as the variables change as i substitute them in is this possible?

2. Please be clear.

Is your problem like this:
an initial deposit of $u is made; then annual deposits of$v are made;
given interest rate and number of annual deposits, calculate future value.

3. yes that would be correct is there a formula for this?

4. My assignment is to make a java program but I can't check to see if works correctly without putting the equation in there to have it calculate the inputted values

5. a = u(1 + i)^n ; future value of initial deposit

b = v[(1 + i)^n - 1] / i ; future value of annual deposits

a + b is your target!

Of course:
u = initial deposit
v = annual deposit
n = number of years
i = annual interest rate

6. wow that makes sense thank you is there anyway to factor in a percent of raise increase?

7. well what it says is expected annual salary increase and it asks for a percentage. sorry for so many posts on this thread

8. If you mean the annual deposit increases by a fixed percentage: yes.
Here's what \$800 increasing by 10%, for 4 years, 12% interest, looks like:
Code:
Y     DEPOSIT   INTEREST    BALANCE
0                               .00
1      800.00       .00      800.00
2      880.00     96.00     1776.00
3      968.00    213.12     2957.12
4     1064.80    354.85     4376.77
FORMULA: F = D[(1+i)^n - (1+j)^n] / (i - j)

D = first deposit amount
n = number of years
i = interest rate
j = deposit increase rate

800(1.12^4 - 1.10^n) / (.12 - .10) = ~4376.77

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