Indicate investment proves to be a better one

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An investor places a sum of R100 000 in a US dollar denominated overseas fixed interest investment earning 6% p.a. compound for a one-year, and "repatriates" the investment with the interest at the end of the year.

Problem 1: During the year period, the value of the Rand depreciates from R7, 01 per Dollar to R7,29 per Dollar. Indicate whether this investment proves to be a better one than leaving the R100 000 in a local savings account earning 3% per annum, drawing on relevant calculations to support your argument.

(Ignore any tax and charges for the purposes of this exercise.)

Reference no: EM132614786

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