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).
To calculate the total amount of money in Kendra's investment after 20 years, we need to calculate the compound interest. The formula for compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (the initial investment)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
In this case, the principal amount (P) is $100,000, the annual interest rate (r) is 0.15, the number of times interest is compounded per year (n) is 1, and the number of years (t) is 20.
Plugging in these values into the formula, we get:
A = 100000(1 + 0.15/1)^(1*20)
A = 100000(1 + 0.15)^(20)
Calculating this expression, the future value of Kendra's investment (rounded to two decimal places) is:
A = 100000(1.15)^20
A = 100000(3.17216954915)
A = $317,216.95
Therefore, Kendra's investment will be worth $317,216.95 in 20 years.