SIMPLE AND COMPOUND INTEREST CASE STUDY

Assuming that you graduated December 31st 2020 from the University of Buraimi and immediately on the 1^st of January 2021, you started working with the Royal Oman police in Muscat.

Your salary is 900 OMR monthly and you decided to save 500 OMR at the end of every month beginning from the end of January 2021.

You put your monthly savings of 500 OMR into a bank Muscat savings account and the bank agree to pay you a simple interest of 10% per annum. You made this savings for 20 years.

At the end of every year (31^st December), you collect your savings together with the simple interest earned in Bank Muscat and take it to Bank Sohar on the 1^st of the next January (beginning from January 1^st 2022) and put it in an account that pays you a compound interest of 10% compounded annually. You also did this for 20 years.

e) What is the future value of all the money that you put in bank Sohar.

f) What is the actual amount that you invested in bank Sohar without the compound interest?

g) What is the total compound interest that you earned in Bank Sohar.

h) When you retire from the Royal Oman Police after 20 years of service how much is the total value of your savings and investment.