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
To find the higher resulting balance, we need to calculate the final amounts for both types of interest.
For simple interest, we can use the formula:
Final Amount = Principal + (Principal * Rate * Time)
Final Amount = $500 + ($500 * 0.08 * 10)
Final Amount = $500 + ($400)
Final Amount = $900
For compound interest, we can use the formula:
Final Amount = Principal * (1 + Rate/100)^Time
Final Amount = $500 * (1 + 0.09)^10
Final Amount = $500 * (1.09)^10
Final Amount ≈ $1227.55 (rounded to two decimal places)
Therefore, the higher resulting balance after investing $500 for a period of 10 years is approximately $1227.55.