Mr X invested R20000 at 10% interest compounded annually for 5 years and Mrs X invested the same amount R20000 at 10% simple intetest for 5

Question

Mr X invested R20000 at 10% interest compounded annually for 5 years and Mrs X invested the same amount R20000 at 10% simple intetest for 5 years Who will get more return on investment between Mr X and Mrs X show calulations​

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Gerda 7 months 2021-08-09T07:54:43+00:00 1 Answers 4 views 0

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  1. Dulcie
    0
    2021-08-09T07:56:08+00:00
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    Answer:

    Since R32,210 is greater than R30,000; it simply means that Mr X would get greater return on investment

    Step-by-step explanation:

    a) Mr X Return

    We have the compound interest formula as;

    V = P(1 + r)^t

    V is the value yielded after some certain amount t

    Where P is the amount invested = R20,000

    r is the yearly interest rate = 10/100 = 0.1

    t = 5 years

    so we have;

    V = 20,000(1 + 0.1)^5 = R32,210.2

    b) Mrs X return

    We use the simple interest formula here;

    A = P + I

    I = PRT/100

    where P, the principal is the amount invested = R20,000

    R = 10%

    T = 5 years

    I = (20,000 * 10 * 5)/100

    I = R10,000

    A = R20,000 + R10,000

    A = R30,000

    Since R32,210 is greater than R30,000; it simply means that Mr X would get greater return on investment

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