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 $.
To find the best balance after investing $12,000 for a period of 7 years using simple interest, we can use the formula:
Balance = Principal + (Principal * Rate * Time)
Rate = 5% = 0.05
Time = 7 years
Balance = 12000 + (12000 * 0.05 * 7)
Balance = 12000 + (8400)
Balance = 20400
To find the best balance after investing $12,000 for a period of 7 years using compound interest, we can use the formula:
Balance = Principal * (1 + Rate/100)^Time
Rate = 4.5% = 0.045
Time = 7 years
Balance = 12000 * (1 + 0.045)^7
Using a calculator or spreadsheet, we can find that the compound interest balance is approximately $16968.34.
To determine the best balance, we compare the two balances and choose the greater one. Therefore, the best balance after investing $12,000 for a period of 7 years is $20,400.