Investment in Friend's Business:

- Initial Investment: Rs.50,000
- Annual Return: Rs.2,400 for 5 years
- Return at the end of 5 years: Rs.60,000

Investment in Bank:

- Interest Rate: 10%

Calculating the Return on Investment in Friend's Business:

To determine the return on investment in your friend's business, we need to calculate the total return over the 5-year period.

- Annual Return: Rs.2,400 for 5 years = Rs.2,400 x 5 = Rs.12,000
- Return at the end of 5 years: Rs.60,000

Total Return = Rs.12,000 + Rs.60,000 = Rs.72,000

Calculating the Return on Investment in Bank:

To determine the return on investment in the bank, we can use the compound interest formula:

Future Value = Principal Amount x (1 + Interest Rate)^Number of Years

Future Value = Rs.50,000 x (1 + 0.1)^5
Future Value = Rs.50,000 x (1.1)^5
Future Value = Rs.50,000 x 1.61051
Future Value = Rs.80,525.50

Total Return = Future Value - Principal Amount
Total Return = Rs.80,525.50 - Rs.50,000 = Rs.30,525.50

Comparing the Returns:

The total return on investment in your friend's business is Rs.72,000, while the total return on investment in the bank is Rs.30,525.50.

Analysis:

From the calculations, it is evident that the return on investment in your friend's business is higher than the return from the bank. However, it is essential to consider the risk factor associated with investing in a friend's business.

Factors to Consider:

1. Risk: Investing in your friend's business carries a higher risk compared to depositing money in a bank. There is a possibility of the business not performing well or even failing, leading to potential loss of your investment.

2. Liquidity: The investment in your friend's business is less liquid compared to the bank. In case of any urgent need for funds, it may not be easy to sell your share in the business and recover your investment quickly.

3. Relationship: Investing in a friend's business can impact your personal relationship. If the business does not perform well or if any conflicts arise, it may strain your friendship.

4. Trust and Knowledge: Consider the trustworthiness of your friend and their business acumen. Assess their track record, business plan, and the potential for growth and profitability.

Conclusion:

While the return on investment in your friend's business appears to be higher, it is crucial to weigh the risks and other factors associated with it. Investing in a friend's business should be done after careful consideration and analysis of the business's prospects, your risk tolerance, and the impact on your personal relationship. It is recommended to consult with a financial advisor before making any investment decisions.

Investment in bank is a good deal as it is safe and in your case it is giving a higher return.Lemme explain,

Case-1) Lending to friend
Principal=)₹50000
Interest amount=)₹2400*5= ₹12000
Amount paid after 5 years=)₹60000
So total return=)₹72000(₹12000+₹60000)-₹50000(Principal)= ₹22000
Final return= 8.8%

Case-2) Investment in Bank
Principal=)₹50000
Return=)10%
Since bank provides compound interest.
So, Interest= ₹30526(You can calculate it on google)
Actual Return= 12.2%

Hence, bank provides more return and is safe too.