To determine which investment is more profitable, we need to calculate the total amount of interest earned by each investment over the 3-year period.
For Tshepiso's investment at 8% per annum simple interest:
Simple interest = P * r * t
where P is the principal amount, r is the interest rate per year, and t is the time period in years.
So, the interest earned by Tshepiso's investment after 3 years is:
I = P * r * t
= 560 * 0.08 * 3
= 134.40
The total amount after 3 years is the sum of the principal and the interest earned:
A = P + I
= 560 + 134.40
= 694.40
For Thando's investment at 7% per annum compound interest:
Compound interest formula:
A = P(1 + r/n)^(n*t)
where A is the amount at the end of the time period, P is the principal, r is the interest rate per year, n is the number of times the interest is compounded per year, and t is the time period in years.
Thando's investment is compounded annually, so n = 1.
So, the amount earned by Thando's investment after 3 years is:
A = P(1 + r/n)^(n*t)
= 560(1 + 0.07/1)^(1*3)
= 694.93
Therefore, Thando's investment is more profitable as it earns a total of R694.93 after 3 years, while Tshepiso's investment earns a total of R694.40 after 3 years.