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Thomas is saving for the 2019 AFL grand final in Melbourne. The trip is estimated...

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Accounting

Thomas is saving for the 2019 AFL grand final in Melbourne. The trip is estimated to cost $6,000 inclusive of all tickets and accommodation. (a) Thomas will set aside his birthday gift of $2,000 in a simple interest account earning 7.5% at a local bank. What will be the accumulated amount after 9 months? (Hint: Round final answer to nearest cents) (b) Thomas also has savings of $3,500, earned over the summer break. He would like to invest his savings in an interest-bearing account that earns interest at a rate of 8% per year compounded quarterly. What will be the accumulated amount after 9 months? (Hint: Round final answer to nearest cents) (c) Alternatively, Thomas bank manager thinks Thomas should immediately pool his money and invest the pooled amount in an account for the same time period which pays interest at a rate of 7.2% per annum, compounded monthly. Thomas is worried that 7.2% p.a. is a lower interest rate compared to the current arrangement and he will not have enough for his trip. (d) Write a short paragraph (8-10 sentences) advising Thomas of his investment outcomes comparing both options including any advice for a successful trip to Melbourne.

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