QUESTION TWO $(10$ MARKS$)$

John has R$10000$ and has approached you for some advice. He would like to investment this

amount for a period of two years only. He has a choice of Investing in one of two investments

and would like you to advise him on the best investment:

$1.$ Investment A: Will earn a return of $15\%$ per annum simple interest.

$2.$ Investment B: Will earn a return of $14\%$ per annum compound interest.

Additional information:

Year Present value Future value

$15\%14\%15\%14\%$

$10\mathrm{.}86960\mathrm{.}87721\mathrm{.}15001\mathrm{.}1400$

$21\mathrm{.}62571\mathrm{.}64671\mathrm{.}32251\mathrm{.}2996$

REQUIRED:

Marks

Sub$-$total Total

$1.$ By calculating the value of each of the investments after two

years, advise John as to which is the better investment $1010$

TOTAL $10$