Georgia Assessments for the Certification of Educators GACE Practice Test

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If Scott contributes 4% of his paycheck to his 401k each pay period at his company, how much will the company contribute if he has a $2,000 per month salary?

$160
$80
$40
Cannot be determined

The correct answer is: $80

To determine the amount the company will contribute based on Scott's contribution to his 401k, we first calculate Scott's contribution. If Scott earns a salary of $2,000 per month and contributes 4% to his 401k, we calculate his contribution as follows: 4% of $2,000 = 0.04 * $2,000 = $80. This means Scott will contribute $80 from his paycheck to his 401k each month. Typically, companies will match employee contributions up to a certain percentage, but without additional information about the company's matching policy, we can only accurately determine Scott's direct contribution. The correct answer provides a valid calculation based on the information given, which is why it is appropriate. If further details about the company's contribution policy were provided (e.g., if the company matches contributions), a different calculation might apply. However, since we don't have that information, we focus solely on Scott's contribution to confirm that $80 is indeed his total contribution.