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 $
For simple interest, the formula to calculate the balance is:
Balance = Principal + (Principal * Rate * Time)
In this case, the principal is $12,000, the rate is 5%, and the time is 7 years.
Balance = 12,000 + (12,000 * 0.05 * 7)
Balance = 12,000 + 4,200
Balance = $16,200
For compound interest, the formula to calculate the balance is:
Balance = Principal * (1 + Rate/100)^Time
In this case, the principal is $12,000, the rate is 4.5%, and the time is 7 years.
Balance = 12,000 * (1 + 0.045)^7
Balance = 12,000 * (1.045)^7
Balance = 12,000 * 1.347859
Balance = $16,173.31
So, the best balance after investing $12,000 for a period of 7 years at simple interest is $16,200 and at compound interest is $16,173.31 (rounded to two decimal places).