Emma plans to loan $1,000 to her friend, who will pay a simple interest rate of 5.8% 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 Emma' s friend owe her? $1,061.36 $1,754.00 $2,081.20 $158.00 Now, assume that Emma's friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 5.8% compounded annually, all other things being equal, how much money will Emma's friend owe her in 13 years? $2,081.20 $1,058.00 $120.71 $ 1,754.00 Emma has another investment option in the market that pays 5.8% nominal interest, but it's compounded quarterly. Keeping everything else constant, how much money will Emma have in 13 years if she invests $1,000 in this fund? $158.00 $129.72 $2,114.01 $1,059.27
Emma plans to loan $1,000 to her friend, who will pay a simple interest rate of 5.8% 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 Emma' s friend owe her? $1,061.36 $1,754.00 $2,081.20 $158.00 Now, assume that Emma's friend volunteers to pay compound interest instead of simple interest for her loan. If interest is accrued at 5.8% compounded annually, all other things being equal, how much money will Emma's friend owe her in 13 years? $2,081.20 $1,058.00 $120.71 $ 1,754.00 Emma has another investment option in the market that pays 5.8% nominal interest, but it's compounded quarterly. Keeping everything else constant, how much money will Emma have in 13 years if she invests $1,000 in this fund? $158.00 $129.72 $2,114.01 $1,059.27
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 25PROB
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Question
Transcribed Image Text:Emma plans to loan $1,000 to her friend, who will pay a simple interest rate of 5.8% 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 Emma'
s friend owe her? $1,061.36 $1,754.00 $2,081.20 $158.00 Now, assume that Emma's friend volunteers to pay
compound interest instead of simple interest for her loan. If interest is accrued at 5.8% compounded annually, all
other things being equal, how much money will Emma's friend owe her in 13 years? $2,081.20 $1,058.00 $120.71 $
1,754.00 Emma has another investment option in the market that pays 5.8% nominal interest, but it's compounded
quarterly. Keeping everything else constant, how much money will Emma have in 13 years if she invests $1,000 in
this fund? $158.00 $129.72 $2,114.01 $1,059.27
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