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 the two decimal places
To find the higher resulting balance, we need to calculate the balance from both simple interest at 8% and compound interest at 9% after 10 years.
For simple interest, the formula to find the balance is:
Balance = Principal * (1 + (interest rate * time))
where Principal is the initial investment, interest rate is 8% (0.08), and time is 10 years.
For compound interest, the formula to find the balance is:
Balance = Principal * (1 + interest rate)^time
where Principal is the initial investment, interest rate is 9% (0.09), and time is 10 years.
Let's calculate the balance for both cases:
Simple interest balance:
Principal = 500, interest rate = 0.08, time = 10 years
Balance = 500 * (1 + (0.08 * 10)) = 500 * 1.80 = 900
Compound interest balance:
Principal = 500, interest rate = 0.09, time = 10 years
Balance = 500 * (1 + 0.09)^10 = 500 * 1.954243 = 977.12
After 10 years, the simple interest results in a balance of 900, and the compound interest results in a balance of 977.12.
Thus, the higher resulting balance after investing 500 for a period of 10 years is 977.12.