Question

diana receives a $5,000 bonus each year. diana decides that she would take her yearly $5,000 bonus and invest it into an index fun with an annual historical growth rate of 16%. find the investment value in 16 years

Answer 1

The investment value in 16 years would be approximately $41,918.59.

Diana receives a $5,000 bonus each year and decides to invest it into an index fund with an annual historical growth rate of 16%. To find the investment value in 16 years, we can use the formula for compound interest:

`A = P(1 + r)^n`

Where:

A = the amount of money accumulated after n years, including interest.

P = the principal amount (the initial amount of money).

r = the annual interest rate (decimal).

n = the number of years the money is invested.

In this scenario, P is $5,000, r is 0.16 (16% expressed as a decimal), and n is 16 years.

By substituting the values we get:

A =
`5000(1 + 0.16/1)^{(1*16)`

A =
`5000(1.16)^1^6`

A ≈ $41,918.59

Therefore, the investment value in 16 years would be approximately $41,918.59.