Hello, Rose Wanjohi!

Are you waiting for some magic formula?

Do the math!

Deal (a) is just compound interest.A woman is offered (a) a lump sum of $100,000 to invest now

or (b) $55,000 to invest at the end of the year

and another $55,000 to invest at the end of the following year.

If both the investments are assumed to earn 7% per annum,

which should she choose if she intends to withdraw money after 2 years?

At the end of two years, she will have: .

Deal (b) is rather lame.

During the first year, she hasnomoney invested.

At the end of the first year, she invests $55,000.

That earns interest during the second year.

. . It will be worth: .

Then she invests another $55,000.

So at the end of two years, she will have: .

Obviiusly, deal (a) is better.