Zoe deposited $900 in a savings account at her bank. Her account will earn an annual simple interest rate of 7%. If she makes no additional deposits or withdrawals, how much money will she have in her account in 13 years? O $967.41 O $2,168.86 O $163.00 O $1,719.00 Now, assume that Zoe's savings institution modifies the terms of her account and agrees to pay 7% in compound interest on her $900 balance. All other things being equal, how much money will Zoe have in her account in 13 years? O $1,719.00 O$963.00 O $2,168.86 O $151.82

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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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 are used throughout this question.
Zoe deposited $900 in a savings account at her bank. Her account will earn an annual simple interest rate of 7%. If she makes no additional deposits
or withdrawals, how much money will she have in her account in 13 years?
O $967.41
$2,168.86
O $163.00
O $1,719.00
Now, assume that Zoe's savings institution modifies the terms of her account and agrees to pay 7% in compound interest on her $900 balance. All
other things being equal, how much money will Zoe have in her account in 13 years?
O $1,719.00
O $963.00
O $2,168.86
O $151.82
Transcribed Image Text: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. Zoe deposited $900 in a savings account at her bank. Her account will earn an annual simple interest rate of 7%. If she makes no additional deposits or withdrawals, how much money will she have in her account in 13 years? O $967.41 $2,168.86 O $163.00 O $1,719.00 Now, assume that Zoe's savings institution modifies the terms of her account and agrees to pay 7% in compound interest on her $900 balance. All other things being equal, how much money will Zoe have in her account in 13 years? O $1,719.00 O $963.00 O $2,168.86 O $151.82
Expert Solution
Given

Here,

Principal “P” is $900

Simple rate "r" is 7%

Number of years “t” are 13

 

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