@Rabeiea-Aslam said in MGT201 GDB 1 Solution and Discussion:

Option 1:
Investing Rs. 100,000 at 12% interest rate compounded semiannually for 10 years
Option 2:
Depositing half of investment amount in a saving account for 10 years that pays 10 % interest rate compounded annually and investing remaining half amount at 12% interest rate compounded annually for 10 years.

Calculation of both Option
Option 1:
Semi Annual Yearly Compounding
FV = PV x (1 + i/2) 2n
FV = 100,000 x (1 + 0.12/2) 2 x 10
FV = 320713.5

Option 2:
FV= PV (1 + i) n
FV = 50,000 (1+0.12) 10
FV = 155292.4
Option 1 is best for Mr. Ahmad because the value of FV is grater than Option 2