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)
$
The amount of money Kendra will have after 20 years can be calculated using the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number of years
In this case, the principal amount (P) is $100,000, the annual interest rate (r) is 15% or 0.15 as a decimal, the interest is compounded yearly (n = 1), and the number of years (t) is 20.
Plugging these values into the formula:
A = 100000(1 + 0.15/1)^(1*20)
A = 100000(1 + 0.15)^(20)
A = 100000(1.15)^20
A ≈ $1,626,364.25
Therefore, Kendra's investment will be worth approximately $1,626,364.25 in 20 years.