Find the best balance after investing $12,000 for a period of 7 years at two different interest earning types: simple interest at 5% and compound interest at 4.5%. Round the answer to two decimal places.(1 point)
The best balance after investing $12,000 for a period of 7 years is
For simple interest at 5%, the formula to calculate the balance after a period of time is:
Balance = Principal * (1 + (Interest Rate * Time))
Using this formula, we can calculate the balance after 7 years:
Balance = $12,000 * (1 + (0.05 * 7)) = $12,000 * (1 + 0.35) = $12,000 * 1.35 = $16,200
For compound interest at 4.5%, the formula to calculate the balance after a period of time is:
Balance = Principal * (1 + Interest Rate)^Time
Using this formula, we can calculate the balance after 7 years:
Balance = $12,000 * (1 + 0.045)^7 = $12,000 * (1.045)^7 = $12,000 * 1.345 = $16,140
Therefore, the best balance after investing $12,000 for a period of 7 years is $16,140.