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 $
.
To calculate the simple interest, we use the formula:
Simple Interest = Principal * Rate * Time
In this case, the principal is $500, the rate is 8%, and the time is 10 years.
Simple Interest = $500 * 0.08 * 10 = $400
Therefore, the balance after 10 years with simple interest would be $500 + $400 = $900.
To calculate the compound interest, we use the formula:
Compound Interest = Principal * (1 + Rate)^Time - Principal
In this case, the principal is $500, the rate is 9%, and the time is 10 years.
Compound Interest = $500 * (1 + 0.09)^10 - $500 ≈ $1093.74
Therefore, the balance after 10 years with compound interest would be approximately $1093.74.
Since $1093.74 is higher than $900, the higher resulting balance after investing $500 for a period of 10 years is $1093.74.