Comparing investment options to

maximise saving

Formula for Simple Interest =

Pr%t

Formula for Compound =

P(1+R%)t
Year Simple Interest Compound
1 $6000*7.6%*1 $6000(1+7.6%)1
$456 $456

2 $6000*7.6%*2 $6000(1+7.6%)2
$912 946.66
3 $6000*7.6%*3 $6000(1+7.6%)3
$1368 $1474.60
4 $6000*7.6%*4 $6000(1+7.6%)4
$1824 $2042.67
5 $6000*7.6%*5 $6000(1+7.6%)5
$2280 $2653.91
Amount at the end
$8280 $8653.91
of five years

At the end of 5 years, compound interest has a result more than simple
interest as usual. They both started at the same result in the first year then
started to increase with compound more. With compound being more, I
believe it will be the best investment to put in, with a result of receiving more
money. They both have the same principal but with compound being more, it
is a great option to take if youre looking for investment. You would want to
take simple interest if you are asking for a loan as it tends to be less then
compound.
Part B
Principal > 15*20*12
= $3600

3 bank interest rates

ANZ 2.55% p.a
Commonwealth 2.50% p.a
ING Direct 3.00% p.a

ANZ

1st year
$3600*1*2.55% = $91.8
New P for 2nd year
$3600 + $91.8 = $3691.8
2nd year
$3691.8*1*2.55% = $94.14
New P for 3rd year
$3691.8 + $94.14 = $3785.94
3rd year
$3785.94*0.5*2.55% = 48.47
Amount = $3785.94 + $48.47 = $3834.41
Commonwealth

1st year
$3600*1*2.50% = $90
New P for 2nd year
$3600 + $90 = $3690
2nd year
$3690*1*2.50% = $92.25
New P for 3rd year
$3690 + $92.25 = $3782.25
3rd year
$3782.25*0.5*2.50% = $47.27
Amount = $3782.25 + $47.27 = $3829.52

ING Direct

1st year
$3600*1*3% = $108
New P for 2nd year
$3600 + $108 = $3708
2nd year
$3708*1*3% = $111.24
New P for 3rd year
$3708 + $111.24 = $3819.24
3rd year
$3819.24*0.5*3% = $57.29
Amount = $3819.24 + $57.29 = $3876.53

Best investment after 2.5 years

$3,890.00

$3,880.00 $3,876.53

$3,870.00

$3,860.00

$3,850.00

$3,840.00
$3,834.41
$3,829.52
$3,830.00

$3,820.00

$3,810.00

$3,800.00
ANZ (2.55%) Commonwealth (2.50%) ING Direct (3.00%)
 Airfares

Departure from Sydney to Denpasar

$635
Including 30KG baggage

Accommodation

$50 per night

$50*7
= $350
 Returns

Returns from Denpasar to Sydney

$677

Total cost to Bali from Sydney, using Singapore airlines.

As well as accommodation, staying at a 4.1/5 rated hotel
called Sanur paradise piazza hotel came to a total of:
To Denpasar: $635
Accommodation: $350
Back to Sydney: $677
Total: $1662

Inflation rate
Principal: $1662
1st year
=$1662*1.5%
=$24.93
=$1662 + $24.93
= $1686.93
2nd year
=$1686.93*1.5%
=$25.30
=$1686.93 + $25.30
=$1712.23
3rd year
=1712.23*0.5*1.5%
=$12.84
=$1712.23 + $12.84
=$1725.07
Final travel cost with inflation rate=
$3736.63

Reflection

The inflation rate, I received is 1.5%. When Ali used the inflation rate, his
principal raised to $1725.07, this affected Ali in a good way as gaining well over
$100 from his principal.

From the trip, he will still have over $2000 and that is an exceptional deal to
take after spending 7 nights on a 4.1/5-star hotel.

I have discovered that the principal after the inflation rate is not much more
than the cost of the whole trip, including accommodation. Whilst subtracting
both, it comes to a difference of $136.63.

With the inflation rate, ail has more than enough to buy himself, accessories or
for people back at Sydney. He also has enough to invest in and wasnt a major
difference from the inflation and the normal cost.