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 $
The formula for simple interest is:
Simple Interest = Principal * Rate * Time
Using this formula, the interest earned by investing $500 for 10 years at 8% would be:
Simple Interest = $500 * 0.08 * 10 = $400
The total amount in the account after 10 years would be:
Total = Principal + Simple Interest = $500 + $400 = $900
The formula for compound interest is:
Compound Interest = Principal * (1 + Rate)^Time - Principal
Using this formula, the interest earned by investing $500 for 10 years at 9% would be:
Compound Interest = $500 * (1 + 0.09)^10 - $500
Calculating this using a calculator or spreadsheet, the compound interest would be:
Compound Interest = $500 * (1.09)^10 - $500 = $1335.18
The total amount in the account after 10 years would be:
Total = Principal + Compound Interest = $500 + $1335.18 = $1835.18
Therefore, the higher resulting balance after investing $500 for a period of 10 years is $1835.18.