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.

a) What is the amount of simple interest you earned each year in Bank Muscat?

b) What is the total amount that you saved yearly without the simple interest?

c) What is the total amount (principal + simple interest) you have in bank Muscat at the end of every year that you transferred to bank Sohar.

d) In all these 20 years, how much was your actual total savings and how much simple interest did you earn in bank Muscat.