To find the higher resulting balance, we can calculate the balance for each type of interest and compare.
1. Simple Interest:
The formula for calculating simple interest is: I = P * R * T
Where:
I = Interest
P = Principal amount
R = Rate of interest (in decimal)
T = Time period
Given:
P = $500
R = 8% = 0.08 (in decimal)
T = 10 years
Using the formula: I = 500 * 0.08 * 10 = $400
Therefore, the simple interest earned after 10 years is $400.
To find the resulting balance, we add the interest to the principal amount:
Balance = Principal + Interest = $500 + $400 = $900
2. Compound Interest:
The formula for calculating compound interest is: A = P * (1 + R)^T
Where:
A = Amount (resulting balance)
P = Principal amount
R = Rate of interest (in decimal)
T = Time period
Given:
P = $500
R = 9% = 0.09 (in decimal)
T = 10 years
Using the formula: A = 500 * (1 + 0.09)^10 = $1212.69
Therefore, the resulting balance after investing $500 for 10 years with compound interest is $1212.69.
Comparing the two balances:
Simple Interest Balance = $900
Compound Interest Balance = $1212.69
Thus, the higher resulting balance after investing $500 for 10 years is $1212.69.
Between simple interest at 8% and compound interest 9%, find the higher resulting balance after investing $500 for a period of 10 years. Round the answer to two decimal places.
3 answers
you sure?
Apologies for the mistake in my previous response. Let me recalculate the correct answer for you.
1. Simple Interest:
The formula for calculating simple interest is: A = P + P * R * T
Where:
A = Amount (resulting balance)
P = Principal amount
R = Rate of interest (in decimal)
T = Time period
Given:
P = $500
R = 8% = 0.08 (in decimal)
T = 10 years
Using the formula: A = 500 + 500 * 0.08 * 10 = $900
Therefore, the resulting balance after investing $500 for 10 years with simple interest is $900.
2. Compound Interest:
The formula for calculating compound interest is: A = P * (1 + R)^T
Where:
A = Amount (resulting balance)
P = Principal amount
R = Rate of interest (in decimal)
T = Time period
Given:
P = $500
R = 9% = 0.09 (in decimal)
T = 10 years
Using the formula: A = 500 * (1 + 0.09)^10 = $1222.67
Therefore, the resulting balance after investing $500 for 10 years with compound interest is $1222.67.
Comparing the two balances:
Simple Interest Balance = $900
Compound Interest Balance = $1222.67
Thus, the higher resulting balance after investing $500 for 10 years is $1222.67.
Thank you for catching the mistake, and I apologize for any confusion caused.
1. Simple Interest:
The formula for calculating simple interest is: A = P + P * R * T
Where:
A = Amount (resulting balance)
P = Principal amount
R = Rate of interest (in decimal)
T = Time period
Given:
P = $500
R = 8% = 0.08 (in decimal)
T = 10 years
Using the formula: A = 500 + 500 * 0.08 * 10 = $900
Therefore, the resulting balance after investing $500 for 10 years with simple interest is $900.
2. Compound Interest:
The formula for calculating compound interest is: A = P * (1 + R)^T
Where:
A = Amount (resulting balance)
P = Principal amount
R = Rate of interest (in decimal)
T = Time period
Given:
P = $500
R = 9% = 0.09 (in decimal)
T = 10 years
Using the formula: A = 500 * (1 + 0.09)^10 = $1222.67
Therefore, the resulting balance after investing $500 for 10 years with compound interest is $1222.67.
Comparing the two balances:
Simple Interest Balance = $900
Compound Interest Balance = $1222.67
Thus, the higher resulting balance after investing $500 for 10 years is $1222.67.
Thank you for catching the mistake, and I apologize for any confusion caused.
3 answers