Question

You receive R2500 from your grandfather on your birthday. You decide to invest the money in the bank for you studies four years from now. The bank gives you the following two options. OPTION A: Invested at 8% compound interest pa for the four years. OPTION B: Invested at 7,5% simple interest pa for the four years. Decide which one will generate more money in the give period. Calculate the percentage increase if the price of diesel increases from R11,21 per litre to R12,30 per litre. Round your answer off to 2 decimal places. An aircraft travels at a speed of 0,9 x 10³ km/h for 24 hours. How far has the aircraft travelled? Give the answer in scientific notation.​

Answer 1

OPTION A:

Using the formula A = P(1+r/n)^(nt) where A is the amount at the end of the investment period, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years:

A = 2500(1 + 0.08/12)^(12*4) = 3323.35

OPTION B:

Using the formula A = P(1 + rt) where A is the amount at the end of the investment period, P is the principal, r is the annual interest rate, and t is the number of years:

A = 2500(1 + 0.075*4) = 3100

Therefore, option A will generate more money in the given period.

Percentage increase in the price of diesel:

The percentage increase is calculated as (new price - old price)/old price * 100%.

Percentage increase = (12.30 - 11.21)/11.21 * 100% = 9.75%

Distance traveled by the aircraft:

Distance = speed x time = 0.9 x 10^3 km/h x 24 h = 21.6 x 10^3 km = 2.16 x 10^4 km (in scientific notation)

Explanation: