One of your ancestors made sure you would live a good life. He invested AED 10000 at

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Question:

One of your ancestors made sure you would live a good life. He invested AED 10000 at 5% interest in a fund for your 100 years ago. (a) How much would the investment be worth today? Clearly show your workings. [10 marks] (b) What is the effect of compounding? Demonstrate clearly the interest on interest earned. [10 marks] (c) Would you invest the amount you obtained in part (a) in a UAE villa in Jumeirah, based on the economic climate today? Explain your answer. [10 marks]

One of your ancestors made sure you would live a good life. He invested AED 10000 at 5% interest in a fund for your 100 years ago.

(a) How much would the investment be worth today? Clearly show your workings. [10 marks]

(b) What is the effect of compounding? Demonstrate clearly the interest on interest earned. [10 marks]

(c) Would you invest the amount you obtained in part (a) in a UAE villa in Jumeirah, based on the economic climate today? Explain your answer. [10 marks]