Bright Mckenzie
06/04/2023 · Elementary School
A company has an investment account with Bank A which offers an effective interest rate of \( 12 \% \) per annum. A competitor bank, Bank B, offers an interest rate of \( 11,5 \% \) p.a, compounded monthly. 5.2 .1 Determine which bank offers the best interest rate. 5.2 .2 The company will invest with the bank offering the best interest rate. The company invests money into a lump sum account that will accrue to R280 000 in 5 years. After 2 years, the company experiences difficulty and withdraws R50 000 from the account. Determine the minimum amount of money they would have to invest which would have accrued to R280 000 .
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Bank B offers a better interest rate. The minimum initial investment required to reach R280,000 in 5 years is approximately R160,000.68. After withdrawing R50,000 after 2 years, an additional investment of approximately R46,800.00 is needed to reach the target amount in 5 years.
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