Question

Do not use thousand separator, use 2 decimal places only (i.e. 1000.00 instead of 1,000).

If you are offered the following investment opportunities, which option will you choose for the best interest earned if you can afford to invest a total of 50,000? You can invest multiple times in an option given based on your available fund (50,000).

	Option 1	Option 2	Option 3	Option 4
P	10,000.00	25,000.00	5,000.00	1,000.00
R	3.00%	2.00%	8.00%	1.50%
T	15 months	1 year	6 months	2.5 years
Interest Earned

I choose option number _____

Answer 1

ANSWER:

Option 1:

Interest Income = Principal * Time * Interest Rate / 100

Interest Income = 50000 * 12 / 15 * 3 / 100

Interest Income = $1200

Option 2:

Interest Income = Principal * Time * Interest Rate / 100

Interest Income = 50000 * 12 / 12 * 2 / 100

Interest Income = $1000

Option 3:

Interest Income = Principal * Time * Interest Rate / 100

Interest Income = 50000 * 6/ 12 * 8 / 100

Interest Income = $2000

Option 4:

Interest Income = Principal * Time * Interest Rate / 100

Interest Income = 50000 * 12 / 30 * 1.5 / 100

Interest Income = $300

The Investment option which provides highest interest income is Option 3 which gives $2000 per 6 months and a total of $4000 for a year