2.2. Tom and Jerry are arguing about interest on money that they have given them for Christmas. They each received R2 345, Tom wants to invest his money at Old Mutual for 7 years at a compound interest rate of \( 19.9 \% \) per annum, while Jerry claims he will do better at Assupol earning \( 23.41 \% \) simple interest per annum over 7 years. Who is correct? ?
Solución de inteligencia artificial de Upstudy
Responder
Solución

¡Inicia sesión para desbloquear respuestas gratis!
Una plataforma de aprendizaje en la que confían millones de estudiantes y profesores reales.

Respondido por UpStudy AI y revisado por un tutor profesional
Mind Expander
To figure out who will earn more, we need to calculate the total amounts each would have after 7 years. For Tom, using the compound interest formula \( A = P(1 + r/n)^{nt} \) where \( P = 2345 \), \( r = 0.199 \), \( n = 1 \) (compounded annually), and \( t = 7 \) years, the calculation results in approximately R8,658.78. For Jerry, the simple interest formula \( A = P(1 + rt) \) leads to \( A = 2345(1 + (0.2341 \times 7)) \), giving about R4,509.78. Thus, Tom's investment yields a higher return! Investing wisely is crucial: always compare different types of interest. While compound interest can significantly amplify your returns over time, simple interest grows linearly. Understanding these differences enables you to make informed decisions and maximize your savings. So, always check the terms before diving into investment options!
