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You have invested 10 000 units in DEF unit trust in 2016 at a price of RM1.00 per unit. The investment company announced a dividend distribution of 6.5 cents per unit the following year. Calculate the dividends you earn and the value of return of investment.​

Sagot :

Answer:

You are better off investing today in the mutual fund and earn 8.2 percent semiannually for 10 years.

Step-by-step explana

We will need to calculate the interest generated in both of these scenarios to determine which one is the best.

In scenario 1

Periods= 10 years * 2= 20 periods (since rate is biannual)

Principal= $12,000

Rate= 8.2%

Using the formula

Interest= Principal * Rate * Time

Interest= 12,000* 0.082 * 20

Interest= $19,680

In scenario 2

Principal= $11,000

Rate= 10%

Period= 8 years ( two years have already passed, so we calculate for 8 years since we want to see gain after 10 years)

Interest= 11,000* 0.10 * 8

Interest= $8,800

So imvesting $12,000 at interest rate of 8.2% biannually for 10 years is a better option.Answer:

You are better off investing today in the mutual fund and earn 8.2 percent semiannually for 10 years.

Explanation:

We will need to calculate the interest generated in both of these scenarios to determine which one is the best.

In scenario 1

Periods= 10 years * 2= 20 periods (since rate is biannual)

Principal= $12,000

Rate= 8.2%

Using the formula

Interest= Principal * Rate * Time

Interest= 12,000* 0.082 * 20

Interest= $19,680

In scenario 2

Principal= $11,000

Rate= 10%

Period= 8 years ( two years have already passed, so we calculate for 8 years since we want to see gain after 10 years)

Interest= 11,000* 0.10 * 8

Interest= $8,800

So imvesting $12,000 at interest rate of 8.2% biannually for 10 years is a better option.

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