Question

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 $

Answer 1

To find the best balance after investing $12,000 for a period of 7 years at simple interest and compound interest, we can use the formulas for simple and compound interest respectively.

Step-by-step explanation:

To find the best balance after investing $12,000 for a period of 7 years at simple interest and compound interest, we can use the formula for simple interest: I = P * R * T, where I is the interest, P is the principal (initial investment), R is the interest rate, and T is the time in years. Based on the given information, the interest earned with simple interest is:

I = 12000 * 0.05 * 7 = $4200

To calculate the compound interest, we can use the formula: A = P(1 + r/n)^(nt), where A is the balance after time t, P is the principal, r is the interest rate, n is the number of times interest is compounded per year, and t is the time in years. Based on the given information, the balance with compound interest is:

A = 12000(1 + 0.045/1)^(1*7) = $15936.46

Therefore, the best balance after investing $12,000 for a period of 7 years is $15,936.46.