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Example - 5. Which is the better investment Rs. 20000 in a saving deposit with a bank for 3 years the interest being compounded half – yearly at the rate of 6% or Rs. 600 per month in a recurring deposit with a bank paying simple interest at 6% p.a. for 3 years?

Solution : For saving deposit, p = 20,000

t = 3 years, n = 6 half years

r = 6% p.a. = 3% per half year

log A = log 20000 + 6 log (1.03)

= 4.3010 + 6 (0.0128)

= 4.3010 + 0.0768

= 4.3778

A = antilog (4.3778)

= 23870

Maturity value = Rs. 23,870

For recurring deposit,

P = 600, t = 3 years, n = 36 months

r = 6%

Amount deposited in the bank = 36 X 600

= 21,600

Maturity value = 21600 + 1998

= Rs.23598

The former is better.