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 $[??]
To find the higher resulting balance, we need to calculate the future value of the investment for both the simple interest and compound interest.
For simple interest, we use the formula:
Future Value (SI) = Principal + (Principal * Rate * Time)
Future Value (SI) = $500 + ($500 * 0.08 * 10) = $500 + $400 = $900
For compound interest, we use the formula:
Future Value (CI) = Principal * (1 + Rate)^Time
Future Value (CI) = $500 * (1 + 0.09)^10
Using a calculator or a spreadsheet, we find:
Future Value (CI) = $500 * (1.09)^10 = $500 * 1.939 = $969.50 (rounded to two decimal places)
Therefore, the higher resulting balance after investing $500 for a period of 10 years is $969.50.
are you sure
Apologies for the error in my previous response. Let me recalculate the compound interest for accuracy.
Future Value (CI) = $500 * (1 + 0.09)^10
Using a calculator or a spreadsheet, we find:
Future Value (CI) = $500 * (1.09)^10 = $500 * 1.948717 = $974.36 (rounded to two decimal places)
Therefore, the higher resulting balance after investing $500 for a period of 10 years is $974.36.