INTRODUCTIONToday, many banks and financial institutions offer wide types of investments and interest rate offers. It is crucial to understand how different types of investments and interest rates can make a huge difference to the final amount. The purpose of this directed investigation is to examine the two options available for a future investment of $10,000 and determine which option is the better choice in terms of interest earned at the end of the term and for how long should it be invested between 4 and 10 years. The first option indicates that the interest rate is 5.75% flat per year, while option 2 indicates the interest rate of 4.65% compounded annually. MethodMany financial formulas will be used as part of the investigation to study the two possible investment plans. If you are looking at option 1, the formula used will be SI = P*R*T/100 where –• SI is the simple interest.• P is the principal amount invested.• R is the annual percentage interest rate .• T is the time in years. This formula will be used to calculate the simple interest on a $10,000 investment after 4 years, 7 years, and 10 years. To study option 2, the formula used will be Fv = Pv (1+r) ^ n where – equilateral• Fv is the future value.• Pv is the present value.• R is the decimal rate.• N is the number periods of composition. This formula will be used to calculate compound interest on $10,000 after 4 years. , 7 years and 10 years if compounded annually.PART 1Balance of each investment after 4 years, 7 years and 10 years and the interest earned on each amountBalance of the two investments after 4 years, 7 years and 10 yearsYears Option 1SI = P*R* T/100 Option 2Fv = Pv (1+r) ^ nB...... middle of paper ...... agreement of interest. The compound interest plan will earn the most interest if the investment were to continue beyond 10 years. During the investigation, the most commonly used formulas were SI = P*R*T/100 and Fv = Pv (1+r) ^ n. Replacing pronumbers with digits was the simplest method to solve the investigation. No assumptions or limitations were made in the investigation. For further investigation, data labels could be added to the chart so that it becomes much clearer to understand all the values. Overall, the best deal depends on the investment duration. If the investment continues beyond 10 years, the compound interest deal is best. If the deal is going to last between 4 and 10 years, then the 4 year simple interest deal seems to be better because it earns the most interest. The balance of this amount could be reinvested in a better deal after 4 years..