1. Simple versus compound interest Aa Aa Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed or a variable interest rate. Assume that fixed interest rates are used throughout this question. Addison plans to loan $900 to her friend, who will pay a simple interest rate of 7.8% every year for the loan. If no payments are made and no further borrowing occurs between them for 11 years, then how much money will Addison's friend owe her? O$1,672.20 $975.68 O $2,056.12 O $170.20 Now, assume that Addison's friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 7.8% compounded annually, all other things being equal, how much money will Addison's friend owe her in 11 years? $2,056.12 O $160.38 O $970.20 O $1,672.20 Addison has another investment option in the market that pays 7.8% nominal interest, but it's compounded quarterly. Keeping everything else constant, how much money will Addison have in 11 years if she invests $900 in this fund? O $170.20 O $972.28 O $2,105.14 O $177.02