Between simple interest at 8% and compound interest at 9% find a higher results balance after investing 500 for a period of 10 years, but only answer to the nearest decimal place the higher resulting balance after 5500 for a period of 10 years
To find the higher resulting balance, we first calculate the simple interest and compound interest for each investment.
For the investment of $500 at a simple interest rate of 8% for 10 years:
Simple interest = Principal * Rate * Time
SI = 500 * 0.08 * 10
SI = $400
The resulting balance after 10 years would be $500 + $400 = $900.
For the investment of $5500 at a compound interest rate of 9% for 10 years:
Final amount = Principal * (1 + Rate/100)^Time
FA = 5500 * (1 + 0.09)^10
Using a calculator or computing it manually,
FA ≈ 5500 * 1.09342
FA ≈ 6013.81
The resulting balance after 10 years would be approximately $6013.81.
Comparing the two resulting balances, we find that $6013.81 is higher than $900 (rounded to the nearest decimal place).