Answer:
Step-by-step explanation:
Use future value formula to get the total amount at the end of year 1 and year 2;
<u>First, find FV at the end of 1 year.</u>
FV = P(1+r)^n
P = principal amount or amount invested in present value terms = 14,000
r= discount rate = 5.9% OR 0.059 as a decimal
n= total duration of investment = 1
FV = 14,000(1.059)^1
FV= 14,826
<u>Next, find FV of 14,826 at the end of year 2;</u>
P = principal amount or amount invested in present value terms = 14,826
r= discount rate = 3.2% OR 0.032 as a decimal
n= total duration of investment = 1
FV = P(1+r)^n
FV = 14,826 (1.032)^1
FV = <em>15,300. 432</em>
Percentage increase =[ (New value - Old value)/Old value] *100
= [ (15,300.432 - 14,000)/14,000] *100
= (1,300.432/14,000)*100
= 9.2888
Therefore total percentage increase over the 2 years = <u>9.29%</u>
