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

Answer 1

To find the higher resulting balance, we need to calculate the total amount for each type of interest.

First, let's calculate the total amount using simple interest:

Simple interest = Principal * Interest rate * Time
Simple interest = $500 * 0.08 * 10
Simple interest = $400

The total amount for simple interest is $500 + $400 = $900.

Next, let's calculate the total amount using compound interest:

Compound interest formula: A = P(1 + r/n)^(nt)

Where:
A = Total amount
P = Principal
r = Interest rate
n = Number of times interest is compounded per year
t = Number of years

In this case, r = 9% = 0.09, n = 1 (compounded once per year), and t = 10.

Compound interest = $500 * (1 + 0.09/1)^(1*10)
Compound interest = $500 * (1 + 0.09)^10
Compound interest ≈ $500 * (1.09)^10
Compound interest ≈ $500 * 1.948717
Compound interest ≈ $974.36 (rounded to two decimal places)

The higher resulting balance after investing $500 for a period of 10 years is $974.36.