To find the difference in balances, we need to calculate the simple interest and compound interest for 10 years.
For simple interest:
Simple Interest = Principal * Rate * Time
Simple Interest = 500 * 0.08 * 10
Simple Interest = 400
To find the compound interest, we use the formula:
Compound Interest = Principal * (1 + Rate/100)^Time - Principal
Compound Interest = 500 * (1 + 0.09/100)^10 - 500
Compound Interest = 598.74 - 500
Compound Interest = 98.74
Now, we can find the higher resulting balance:
Higher Resulting Balance = Principal + Interest
Higher Resulting Balance = 500 + 400 (for simple interest)
Higher Resulting Balance = 900
Higher Resulting Balance = Principal + Compound Interest
Higher Resulting Balance = 500 + 98.74 (for compound interest)
Higher Resulting Balance = 598.74
Therefore, the higher resulting balance after investing $500 for a period of 10 years is $598.74.
Between simple interest at 8% and compound interest at 9%, find the higher resulting balance after investing $500 for a period of 10 years. Round the answer to two decimal places.(1 point)
The higher resulting balance after investing $500 for a period of 10 years is $-----
.
1 answer