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Simple versus compound interest Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed or a variable interest rate. Assume

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Simple versus compound interest 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. Isabella deposited $900 in a savings account at her bank. Her account will earn an annual simple interest rate of 7.4%. If she makes no additional deposits or withdrawals, how much money will she have in her account in five years? $1, 286.07 $1, 233.00 $971.53 $166.60 Now, assume that Isabella's savings institution modifies the terms of her account and agrees to pay 7.4% in compound interest on her $900 balance. All other things bong equal, how much money will Isabella have in her account in five years? $95.17 $966.60 $1, 233.00 $1, 286.07 Suppose Isabella had deposited another $900 into a savings account at a second bank at the same time. The second bank also pays a nominal (or stated) interest rate of 7.4% but w.th quarterly compounding. Keeping everything else constant, how much money will Isabella have in her account at this bank in five years? $166.60 $103.21 $968.47 $1, 298.56

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