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Lerato has R10000 to invest She invests the money in a bank for 3 years at an interest rate of \( 7 \% \) per annum compounded annually. She extends the penod of investment for a further 2 years when the bank offers her an Interest rate of \( 8,5 \% \) compounded monthly. At the end of this period, due to a decrease in the repo rate, the bank informs her that they will decrease the interest rate on her investment to \( 8 \% \) pa simple interest. Lerato therefore decides to leave her money in the bank for only one more year. 1.3.1 Draw a timeline for the above investment

Ask by Hobbs Page. in South Africa
Mar 17,2025

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Here's a timeline of Lerato's investment: - **Year 0**: Deposits R10,000. - **Years 1-3**: Invested at 7% annual compound interest. - **Year 3**: First investment period ends. - **Years 3-5**: Invested at 8.5% annual compound interest, compounded monthly. - **Year 5**: Second investment period ends. - **Year 5-6**: Invested at 8% annual simple interest. - **Year 6**: Final investment period ends.

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The Deep Dive

To visualize Lerato's investment journey, imagine a timeline that spans 6 years. Here's how it looks: **Year 0**: Lerato invests R10,000 at an interest rate of 7% compounded annually. **Year 1**: The first year elapses, and she sees her investment grow. **Year 2**: The second year passes, adding more interest. **Year 3**: By the end of the third year, her investment is at its peak under the 7% rate. **Year 4**: She switches to an 8.5% interest rate compounded monthly. **Year 5**: During the fifth year, her investment continues to accumulate interest with this new rate. **Year 6**: Lerato receives the news of a drop to 8% simple interest and decides to keep her money in the bank for one more year. This timeline effectively traces Lerato's investment evolution through different interest rates and periods! For extra fun, you might want to add some doodles on the timeline, like little bank icons for each year that reflecting her growing savings!

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