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Calculate simple interest for 1 year and total amount after 2 years, and compound interest for 2 years.
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4 partsStep-by-step solution
11 stepsHere are the solutions to Question 2 and Question 3.
Part 2
Part 2.1
Identify the principal amount, interest rate, and time.
Principal () = R15 000
Annual simple interest rate () = 6% = 0.06
Time () = 1 yearUse the simple interest formula to calculate the interest added each year.
The interest that will be added each year is .
Part 2.2
Identify the principal amount, annual simple interest rate, and total time.
Principal () = R15 000
Annual simple interest rate () = 6% = 0.06
Time () = 2 yearsUse the simple interest formula for total amount .
The amount available in his account after 2 years will be .
Part 2.3· 3 steps
Calculate the amount with compound interest at 5% compounded annually for 2 years.
Principal () = R15 000
Annual compound interest rate () = 5% = 0.05
Number of compounding periods () = 2 years
Use the compound interest formula .Compare this amount to the amount calculated in 2.2 (simple interest at 6% for 2 years).
Amount with simple interest (6%) = R16 800
Amount with compound interest (5%) = R16 537.50Justify or refute the manager's claim.
Since R16 800 > R16 537.50, Thabo would have less money with the 5% compound interest deal.
Therefore, the manager's claim is refuted. Thabo's current deal of 6% simple interest is better.
Part 3
Pinkie wants to invest R12 000 at an interest rate of 5% per annum for 3 years.
Part 3.1
Identify the principal amount, annual simple interest rate, and time.
Principal () = R12 000
Annual simple interest rate () = 5% = 0.05
Time () = 3 yearsUse the simple interest formula for total amount .
If simple interest is added, Pinkie will have in her account.
Part 3.2
Identify the principal amount, annual compound interest rate, and number of compounding periods.
Principal () = R12 000
Annual compound interest rate () = 5% = 0.05
Number of compounding periods () = 3 years (compounded annually)Use the compound interest formula .
If interest is compounded annually, Pinkie will have in her account.
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