Question

2 months ago Michael deposited R9000 into savings account at a simple interest rate of 11.5% per year. He also deposited R5000 six months ago into another savings account earning 8% per year compounded half yearly. The total amount of Michael's savings in 3 years time is

Answer 1

Simple interest

$A=P(1+rt)$

Time ($t)$ is $3 years +\frac{2}{12} months$

$A = 9000(1+(0.115*3.167))$

$A =$ $R12,277.85$

Compound interest

$A = P(1+\frac{r}{n})^{nt}$

Time ($t$) is $3 years + \frac{6}{12} months$

$A = 5000(1+\frac{0.08}{2})^{2*3.5}$

$A = R 6,579.66$

Total amount

$TA =$ $R12,277.85$ $+$ $R6,579.66$

$TA = R18,857.51$