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Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed...

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Finance

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.

Abigail plans to loan $1,200 to her friend, who will pay a simple interest rate of 8.2% every year for the loan. If no payments are made and no further borrowing occurs between them for 13 years, then how much money will Abigails friend owe her?

$2,479.20

$3,342.99

$198.40

$1,306.47

Now, assume that Abigails friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 8.2% compounded annually, all other things being equal, how much money will Abigails friend owe her in 13 years?

$1,298.40

$2,479.20

$3,342.99

$274.13

Abigail has another investment option in the market that pays 8.2% nominal interest, but its compounded quarterly. Keeping everything else constant, how much money will Abigail have in 13 years if she invests $1,200 in this fund?

$305.85

$3,447.13

$1,301.47

$198.40

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