The economy of Ghana has suffered a considerable hair cut policy of 30% A pensioner who invested $85,000.00 in a bond was affected by this policy. The bank however is prepared to pay a simple interest of 18% per annum after the hair cut on the investment. Assuming the pensioner decided to invest his amount for 4years, calculate his investment after the said period.
First, calculate the amount of money the pensioner lost due to the 30% haircut policy:
Haircut amount = $85,000.00 x 30% = $25,500.00
After the haircut, the pensioner's investment amount is:
$85,000.00 - $25,500.00 = $59,500.00
Now, calculate the simple interest earned each year:
Simple interest = $59,500.00 x 18% = $10,710.00
After 4 years, the total investment amount will be:
Total investment amount = $59,500.00 + ($10,710.00 x 4) = $59,500.00 + $42,840.00 = $102,340.00
Therefore, after 4 years, the pensioner's investment will be $102,340.00.