Kendra signed a contract to play professional soccer. She got a $100,000 signing bonus, and she decided to invest the bonus in a money market account that pays 15% interest compounded yearly. She plans to use the signing bonus when she retires in 20 years. How much will her investment be worth in 20 years? Round the answer to two decimal places.
To calculate the future value of Kendra's investment after 20 years, we will use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the future value, P is the principal amount (in this case, the signing bonus of $100,000), r is the annual interest rate (15%), n is the number of times that interest is compounded per year (1), and t is the number of years (20).
Plugging in the values, we get:
A = 100,000(1 + 0.15/1)^(1*20)
A = 100,000(1 + 0.15)^(20)
A = 100,000(1.15)^20
A ≈ 1,600,198.22
Therefore, Kendra's investment will be worth approximately $1,600,198.22 after 20 years.