Answer to Question #146607 in Accounting for Grace Thoso

Question

What will my investment of R100 500 be worth if my bank pays me simple interest of 9% per
annum and I invest my money for 180 days?

Answer 1

Solution to question 146607

A.  Scenario 1: Assume that a year has 365 days

     i.       Interest(I)= Principal investment(P)*Rate(R)*Time(T), where T is usually in years

   ii.       Total Investment (TI)=Interest + Principal investment

First,

find the interest using formula i above.

I=R100,500*9%*180/365

I=R100,500*0.09*180/365

I=R4,460.55

Then, add the interest to the principal value as shown in formula ii above.

So,

Total Investment (TI) = R4,460.55+R100,500

Total

Investment = R104,960.55

 

B.    Scenario 2: Assume a year has 360 days

Referring to i and ii above, the solution will be;

I=P*R*T

I=R100,500*0.09*180/360

I =

R4,522.50

TI=I+P

TI=R4,522.5+R100,500

Total

Investment = R105,022.50