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​

Answer 1

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

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