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 higher resulting balance, we need to compare the future values of the two investments. The formula for simple interest is:
Future Value = Principal * (1 + (interest rate * time))
For compound interest, the formula is:
Future Value = Principal * (1 + interest rate)^time
For the simple interest investment:
Future Value = 500 * (1 + (0.08 * 10))
Future Value = 500 * (1 + 0.80)
Future Value = 500 * 1.80
Future Value = $900
For the compound interest investment:
Future Value = 500 * (1 + 0.09)^10
Future Value = 500 * (1.09)^10
Future Value = 500 * 2.367320768
Future Value = $1,183.66
Therefore, the higher resulting balance after investing $500 for a period of 10 years is $1,183.66.