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.
The higher resulting balance after investing $500 for a period of 10 years is $_
3 answers
The higher resulting balance after investing $500 for a period of 10 years is $984.41.
how
To calculate the higher resulting balance, we need to find the balance after 10 years for both the simple interest at 8% and compound interest at 9%.
For simple interest, the formula is:
Balance = Principal * (1 + interest rate * time)
So for 10 years at 8% interest:
Balance = $500 * (1 + 0.08 * 10)
Balance = $500 * (1 + 0.8)
Balance = $500 * 1.8
Balance = $900
For compound interest, the formula is:
Balance = Principal * (1 + interest rate)^time
So for 10 years at 9% interest:
Balance = $500 * (1 + 0.09)^10
Balance = $500 * (1.09)^10
Balance = $500 * 1.949
Balance = $974.50
Therefore, the higher resulting balance after investing $500 for a period of 10 years is $974.50.
For simple interest, the formula is:
Balance = Principal * (1 + interest rate * time)
So for 10 years at 8% interest:
Balance = $500 * (1 + 0.08 * 10)
Balance = $500 * (1 + 0.8)
Balance = $500 * 1.8
Balance = $900
For compound interest, the formula is:
Balance = Principal * (1 + interest rate)^time
So for 10 years at 9% interest:
Balance = $500 * (1 + 0.09)^10
Balance = $500 * (1.09)^10
Balance = $500 * 1.949
Balance = $974.50
Therefore, the higher resulting balance after investing $500 for a period of 10 years is $974.50.
1 answer