Kobe Bryant became a NBA legend with his smooth moves on the basketball court, it appears that he has some smooth moves off the court as well. According to espn Kobe Bryant’s 6 million investment grew to become 2oo million in about four and a half years.
An application of the mathematics taught in the 11th grade is to work out the annual interest rate of Bryant’s investment using the compound interest formula.
The following article discusses what investors should consider a “good rate of return”, and suggests that 15% to 20% is high and too much to realistically expect.
It is obvious that Bryant’s investment yielded a return that every investor dreams of getting, but the question is what is the exact rate of return his investment achieved?
To answer the question we will use the compound interest formula found in every high school math textbook…
A is the “Accumulated amount” of money so for this case it would be the $200 million that Kobe’s investment grew to.
P is the “Present (or starting) Value”, in this case its the $6 million Kobe initially invested.
n is the number of times interest is compounded in a year, this could be 1 (once a year), 2 (semi annually), 4 (quarterly or once every 3 mouths), 12 (monthly) or possibly 365 (daily) in this case we will assume the investment is compounded monthly
t is the number of years you invest your money, in this case it would be 4.5 years
I is our annual interest rate which is our unknown and what we work out.
Lets work out what Kobe’s rate of return is …
So there you have it, Bryant’s investment yielded a 80.5% return… indeed a “Boss move investment”!