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 compare the final amount after 10 years for both types of interest.
For simple interest, the formula to calculate the final amount of money accrued is:
Final Amount = Principal + (Principal * Rate * Time)
For compound interest, the formula to calculate the final amount of money accrued is:
Final Amount = Principal * (1 + Rate/100)^Time
Given:
Principal (P) = $500
Time (T) = 10 years
For simple interest at 8%, the rate (R) is 8/100 = 0.08
Final Amount (F1) = 500 + (500 * 0.08 * 10) = $900
For compound interest at 9%, the rate (R) is 9/100 = 0.09
Final Amount (F2) = 500 * (1 + 0.09/100)^10 = $1229.87 (rounded to 2 decimal places)
So, the higher resulting balance after investing $500 for a period of 10 years is $1229.87.