Reference no: EM132623535

Mr Brown is seeking your advice on two investment plans for a $10,000 inheritance.

The first option is to place it in a bank fixed-term deposit account for three years and earn interest of 4% p.a. compounded half-yearly.

The second option is to lend the money to a relative who has offered to pay him simple interest of 5% for the three years, and will repay the loan with interest at the end of the three year period.

Problem 1: Task Advise Mr Brown which option would provide the better result for him and by how much.

Problem 2: Which TWO of the following will give the same amount at the end of the investment?

( a ) 10% compounded half yearly for 2.5 years

( b ) 5% compounded annually for 2.5 years

( c ) 10% compounded annually for 5 years

( d ) 5% compounded annually for 5 years