Answer: £20 doubling at the end of each year for 5 years
From the question, Stephen would want to select one option which gives the highest amount of profit. I mean, even if you were to select one, you would obviously try calculating all the 4 choices to see which one makes you earn the most money. Now let's conduct the workout and see which one will earn us the most £ in 5 years:
Option 1:
[tex](500*\frac{5}{100} ) + 500 ---- > 1yr\\= 25 + 500 \\ = 525\\\\(525*\frac{5}{100} ) + 525 ----- > 2yrs\\= 26.25 + 525\\= 551.25\\\\(551.25 * \frac{5}{100}) + 551.25 - - - > 3yrs\\ = 27.563 + 551.25\\= 578.813\\\\(578.813 * \frac{5}{100}) + 578.813 - - > 4 yrs\\ = 28.941 + 578.813\\ = 607.754 \\\\(607.754 * \frac{5}{100}) + 607.754 - - > 5 yrs\\ = 30.388 + 607.754\\ = 638.142 \\[/tex]
ans: £ 638.142
Option 2:
[tex]1 year = 12 months\\5 years : 5*12 = 60 months\\\\10*60 = 600[/tex]
ans: £ 600
Option 3:
[tex](550*\frac{3}{100}) + 550 - - - - > 1yr\\= 16.5 + 550\\= 566.5 \\\\(566.5 * \frac{3}{100}) + 566.5 - - - > 2 yrs\\ = 16.995 + 566.5\\= 583.495\\\\(583.495 * \frac{3}{100}) + 583.495 - - > 3 yrs\\ =17.505 + 583.495\\= 601\\\\(601 * \frac{3}{100}) + 601 - - - - - - > 4 yrs\\= 18.03 + 601\\= 619.03\\\\( 619.03* \frac{3}{100}) + 619.03 - - - - > 5 yrs\\= 18.571 + 619.03\\= 637.601[/tex]
ans: £ 637.601
Option 4:
[tex]20*2= 40 - - - - > 1yr\\40 * 2= 80 - - -- > 2 yrs\\80*2 = 160 - - - > 3 yrs\\160*2 = 320 - - - > 4 yrs\\320*2= 640 - - - > 5yrs[/tex]
ans: £ 640
Out of all the calculated answers, you can see that option 4 has the highest amount. So that's it. By the way, I might do some incorrections in some calculations because I am not good at long maths, but yes i hope I did it all right!
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hope it helped
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