Two friends decide to invest some money. Paul invests R 1 500 every 3 months into a bank that pays 10% p.a. interest every quarter. Peter invests R 3 500 every year into a different bank that pays 14% p.a. Who will have the most money at the end of 15 years?
Paul
Peter
It is impossible to say
None of the above.
To determine who will have the most money at the end of 15 years, we can calculate the future value of their investments.
For Paul:
Interest rate = 10% p.a. = 2.5% per quarter
Number of quarters in 15 years = 15 years * 4 quarters/year = 60 quarters
Future value = R 1,500 * ((1 + 0.025)^60 - 1) / 0.025 = R 472,655.13
For Peter:
Interest rate = 14% p.a.
Number of years = 15 years
Future value = R 3,500 * (1 + 0.14)^15 = R 15,059.06
Therefore, Paul will have the most money at the end of 15 years with R 472,655.13.