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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
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. Heather plans to loan $1, 200 to her friend, who will pay a simple $2, 604.00 interest rate of 9% every year for the loan. If no payments are $1, 317.72 made and no further borrowing occurs between them for 13 $3, 678.97 years, then how much money will Heather's friend owe her? $208.00 Now, assume that Heather's friend volunteers to pay compound $3, 678.97 interest instead of simple interest for her loan. If interest is $2, 604.00 accrued at 9% compounded annually, all other things being $331.11 equal, how much money will Heather's friend owe her in 13 $1, 308.00 years? Heather has another investment option In the market that pays 9% nominal interest, but it^s compounded quarterly. Keeping everything else constant, how much money will Heather have in 13 years if she invests $1, 200 In this fund? $208.00 $1, 311.70 $374.41 $3, 816.57
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