which is the better investment over 10 years?
£20,000 at 12% compound interest PA (per annum)
£30,000 at 8% compound interest PA
1)one year = £20,000 x 1.12 = £24,000
ten years = £20,000 x (1.12)10 = £62,116.96
interest = £62,116.96 - £20,000 = £42,116.96
2)one year = £30,000 x 1.08 = £32,400
ten years = £30,000 x (1.08)10 = £64,767.75
interest = £64,767.75 - £30,000 = £34,767.75
option 1 is a better investment.