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If an employee invests [tex]5 \%[/tex] of his pre-tax salary into a retirement plan, the company will match [tex]25 \%[/tex] of that amount. How much will the company contribute to the plan if the employee earns [tex]\$ 50,000[/tex] before taxes?

A. [tex]\$ 6,250[/tex]
B. [tex]\$ 2,500[/tex]
C. [tex]\$ 625[/tex]
D. [tex]\$ 250[/tex]



Answer :

GinnyAnswer
Let's break down the steps to solve the problem:

1. Calculate the employee's investment amount:
The employee invests 5% of their pre-tax salary into the retirement plan. If their pre-tax salary is [tex]$50,000, you can calculate the investment amount as follows: \[ \text{Employee Investment Amount} = 50000 \times 0.05 = 2500 \] 2. Calculate the company's contribution: The company's contribution is 25% of the employee's investment amount. Given that the employee's investment amount is $[/tex]2500, the company's contribution can be calculated as:

[tex]\[ \text{Company Contribution} = 2500 \times 0.25 = 625 \][/tex]

Hence, the amount that the company will contribute to the retirement plan is [tex]\( \boxed{625} \)[/tex].

So the correct answer is:
C. $625

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