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Financial Math Solution

The document outlines a financial mathematics problem involving investments in simple and compound interest. It details the calculations for determining the amounts invested at 8% simple interest and 6% compound interest, resulting in approximately UGX 3,655,953.23 and UGX 8,344,046.77, respectively. The total investment is UGX 12,000,000 with a total interest of UGX 3,360,000 after 4 years.

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8 views2 pages

Financial Math Solution

The document outlines a financial mathematics problem involving investments in simple and compound interest. It details the calculations for determining the amounts invested at 8% simple interest and 6% compound interest, resulting in approximately UGX 3,655,953.23 and UGX 8,344,046.77, respectively. The total investment is UGX 12,000,000 with a total interest of UGX 3,360,000 after 4 years.

Uploaded by

dbavistrevor05
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Financial Mathematics Solution: Simple Interest

and Compound Interest

Total amount = UGX 12,000,000

Let x = amount invested at 8% simple interest

Let y = amount invested at 6% compound interest

Equation 1 (Total money):

x + y = 12,000,000

Simple Interest Formula: SI = PRT / 100

SI = (x × 8 × 4) / 100

SI = 0.32x

Compound Interest Formula: A = P(1 + R/100)^n

A = y(1 + 6/100)^4

A = y(1.06)^4

A = 1.26247696y

Compound Interest = A − P

CI = 1.26247696y − y

CI = 0.26247696y

Total Interest after 4 years = UGX 3,360,000

Equation 2:

0.32x + 0.26247696y = 3,360,000

From Equation 1:

x = 12,000,000 − y
Substitute into Equation 2:

0.32(12,000,000 − y) + 0.26247696y = 3,360,000

3,840,000 − 0.32y + 0.26247696y = 3,360,000

3,840,000 − 0.05752304y = 3,360,000

480,000 = 0.05752304y

y = 480,000 / 0.05752304

y ≈ 8,344,046.77

x = 12,000,000 − 8,344,046.77

x ≈ 3,655,953.23

Final Answer:

Amount invested at 8% simple interest ≈ UGX 3,655,953.23

Amount invested at 6% compound interest ≈ UGX 8,344,046.77

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