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.

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.

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.