Question: Supose you won 10,000 pesos and you plan to invest it for 5 years. A cooperative group offers 2% simple interest rate per year. A bank offers 2% compounded annually. Which will you choose and why?
Jeff stood in the center while Ms. Lovella stood beside the board, watching his actions.
The room was quiet, except for the soft hum of the fan.
He scratched his head and mumbled, "Alright, I need to compare both, so I'll start with the simple one."
He then grabbed a piece of chalk and began answering the question.
"Since I already know the formula," he uttered as the sound of writing echoed in the silent classroom.
As he wrote it down:
Formula: I = P × r × t
(Where I is interest, P is principal, r is rate, and t is time in years)
Then, just below that, he listed the values:
Principal (P) = 10,000 pesos
Rate (r) = 2% or 0.02
Time (t) = 1 to 5 year
He wrote it down using a table to make it more presentable. Jeff then paused for a moment.
