# Thread: Accounting-Comparing investment alternatives

1. ## Accounting-Comparing investment alternatives

Hello,

I answer each section of the problem; but I do not understand which is the best alternative out of interest earn or rate of return.

a.) Calculate the interests earn on the savings account for six months.
I = Principal*Rate*Time
I = ($4800) (0.055) (0.5) I=132 b.) Calculate the rate of return if the money is lent to Judy. Rate of return = Amount of return Amount invested =$5,100
$4,800 = 1.0625 = 1.0625 = .0625 =6.25 Which alternative would you recommend? 2. Originally Posted by Lydia08 a.) Calculate the interests earn on the savings account for six months. I = Principal*Rate*Time I = ($4800) (0.055) (0.5)
I=132

b.) Calculate the rate of return if the money is lent to Judy.
Rate of return = Amount of return
Amount invested
= $5,100$4,800
= 1.0625
= 1.0625
= .0625
=6.25
Depends on what Judy can get after 6 months if she takes option a)

As it is, she'll get $300 revenue using b) But if she invests at (as example) 10% after 6 months, she'll het 4800 * .10 / 2 =$240; 240 + 132 = \$372