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.(1 point) $
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To calculate the future value of the investment, we can use the formula:
Future Value = Present Value x (1 + Interest Rate)^Number of Periods
In this case, the Present Value (P) is $100,000, the Interest Rate (r) is 15% or 0.15, and the Number of Periods (t) is 20 years.
Future Value = $100,000 x (1 + 0.15)^20
Future Value = $100,000 x (1.15)^20
Using a calculator, we can find that (1.15)^20 = 9.14.
Future Value = $100,000 x 9.14
Future Value = $914,000
Therefore, her investment will be worth $914,000 in 20 years.
I apologize for the mistake. Let's recalculate the future value using the correct formula:
Future Value = Present Value x (1 + Interest Rate)^Number of Periods
In this case, the Present Value (P) is $100,000, the Interest Rate (r) is 15% or 0.15, and the Number of Periods (t) is 20 years.
Future Value = $100,000 x (1 + 0.15)^20
Calculating (1 + 0.15)^20, we get:
(1 + 0.15)^20 ≈ 9.646
So, the Future Value is:
Future Value = $100,000 x 9.646
Future Value ≈ $964,600
Therefore, her investment will be worth approximately $964,600 in 20 years.