1 answer:
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Answer:
The correct option is;
(f) 7.6%
Step-by-step explanation:
The given parameters are;
The number of years Tom and Jerry are investing their money, t = 8 years
The rate of return for Tom's investment, r₁ = 9%
The rate of return for Jerry's investment, r₂ = 10%
The rate at which the interest is compounded, n = Annually = 1
Let P represent the equal amount of money each of Tom and Jerry invested separately
The amount, A, of the investment is given by the following formula;
Substituting the known values for Tom, gives;
The amount Tom has after 8 years ≈ 1.993·P
Substituting the known values for Jerry, gives;
The amount Jerry has after 8 years ≈ 2.144·P
The percentage amount Jerry has more than Tom after 8 years, PA is given as follows;
The amount Jerry will have after 8 years than Tom = PA ≈ 7.6%.