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ue on Jun 4 at 11 PM EDT 1. Simple versus compound interest Financial contracts involving investments, mortgages, loan and so on are based on
ue on Jun 4 at 11 PM EDT 1. Simple versus compound interest Financial contracts involving investments, mortgages, loan and so on are based on either a fixed or a variable interest rate. Assume that fixed interest rates are used throughout this question. $2,921.26 Ava plans to loan $1,700 to her friend, who will pay a simple interest rate of 6.2% every year for the loan. If no payments are $205.40 $1,811.94 made and no further borrowing occ between them for nine years, then how much money will Ava's friend owe her? $2,648.60 $181.12 Now, assume that Ava's friend volunteers to pay compound interest instead of simple interest for her loan. If interest is Q $1,805.40 accrued at 6.2% oompounded annually, all other things being $2,648.60 equal, how much money will Ava's friend owe her in nine years? $2,921.26 Ava has another investment option in the market that pays 6.2% nominal interest, but it's compounded quarterly. Keeping everything else constant, how much money will Ava have in nine years if she invests $1,700 in this fund? Q $2,957.51 $205.40 Q $1,807.88 $194.74
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