QUESTION 2 John decided to start a car wash service on Saturdays in his matric year. He rented a Power washer for R300 per day. He asked his brother Tommy to help him. He pays Tommy R50 a day. John's variable expenses amount to R4 per car John charges R120 per car

1.1) A loan is a sum of money borrowed by one party from another, with the agreement that the money will be repaid, often with interest, over a specified period. In this context, Musa is borrowing R5 000 to buy tiles for his house.

1.2) Step 1: Identify the given values for Option 1. Principal amount ($P$) = R5 000 Annual interest rate ($i$) = 7.8% = 0.078 Compounding frequency = yearly (so $n=1$) Time ($t$) = 24 months = 2 years Step 2: Use the compound interest formula to calculate the total amount ($A$). The formula for compound interest is $A = P(1 + \frac{i}{n})^{nt}$. Since it's compounded yearly, $n=1$. $A = P(1 + i)^t$ $A = 5000(1 + 0.078)^2$ $A = 5000(1.078)^2$ $A = 5000(1.162084)$ $A = 5810.42$ The total amount Musa will pay back for Option 1 is $\boxed{R5810.42}$.

1.3) Step 1: Calculate the total amount for Option 2. Principal amount ($P$) = R5 000 Annual simple interest rate ($r$) = 9.5% = 0.095 Time ($t$) = 2 years Step 2: Use the simple interest formula to calculate the total amount ($A$). The formula for simple interest is $A = P(1 + rt)$. $A = 5000(1 + 0.095 \times 2)$ $A = 5000(1 + 0.19)$ $A = 5000(1.19)$ $A = 5950$ The total amount Musa will pay back for Option 2 is R5950.00. Step 3: Compare the total amounts for both options. Option 1 total amount: R5810.42 Option 2 total amount: R5950.00 Step 4: Recommend the best option. Musa should choose the option that requires him to pay back the least amount of money. Since R5810.42 (Option 1) is less than R5950.00 (Option 2), Option 1 is the better choice. Musa should choose $\boxed{Option 1}$ because it results in a lower total repayment amount.

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