A regional printing company has £24,000 of spare cash. For the next two years it can either keep the cash in a savings account or spend all of it on upgrading its online ordering system. The savings account has no fees, and the company would make no withdrawals.
| Option | Return | Period |
|---|---|---|
| Savings account | 3.2% simple interest per year | 2 years |
| Online ordering system upgrade | Expected additional profit of £1,500 per year; the company's estimates range from £600 to £2,400 per year | 2 years |
Calculate the difference between the return from the savings account and the expected return from the upgrade over the two years. Recommend which option the company should choose, giving a reason that takes the range of profit estimates into account.
75 exam-style questions on AQA GCSE Economics 2.1 Introduction to the national economy, covering 2.1.1a What an interest rate is, 2.1.1b Interest rates and consumer decisions, 2.1.1c Interest rates, producer decisions and calculations, 2.1.2a UK government revenue and spending, and 2.1.2b Direct, indirect and progressive taxation. Each one has a worked solution and a mark scheme showing where the marks go.