E1. Go to the federal reserve website, http://www.federalreserve.gov. go to “economic research and data “, access “ consumer credit. Find the interest rates charged by commercial banks on new automobiles loans, personal loans, and credit cards plans.
A. Compare the current or recent level of interest rates among the types of loans.
B. Compare trends in the cost of consumer credit provided by commercial banks over the past three years.
P2. Find the future value of $10,000 invested now after 5 years if the annual interest rate is 8 percent.
A. What would be the future value if the interest rate is a simple interest rate?
B. What would be the the future value if the interest rate is a compound interest rate?
P3. Determine the future values if $5,000 is invested in each of the following situations:
a. 5% for 10 years
b. 7% for 7 years
c. 9% for 4 years
P4. You are planning to invest $2,500 today for 3 years at a nominal interest rate of 9 % with annual compounding.
a. What would be the annual future value of your investment?
b. Now assume that inflation is expected to be 3% per year over the same 3 year period. What would be the investment’s future value in terms of purchasing power?
c. What would be the investment‘s future value in terms of purchasing power if inflation occurs at a 9% annual rate?
P5. Find the percentage value of $7,000 to be received one year from now, assuming a 3% annual discount interest rate. Also calculate the present value if the $7,000 is received after 2 years .
P7. Determine the present value if $ 15,000 is to be received at the end of 8 years and the discount interest rate is 9 %. How would your answer change if you had to wait six years to received the $15,000?
P16. Use a financial calculator or computer software program to answer the following question:
A. What would be the future value of $15,555 invested now if it earns interest at 14.5% for seven years?
B. What would be the value of $19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18%?
P17. Use a financial calculator or computer software program to answer the following questions:
A. What is the present value of $359,000 that is to be received at the end of 23 years if the discount rate is 11 %?
B. How would your answer change in example (A) if the $359,000 is to be received at the end of 20 years?
P19. Use the financial calculator or computer software program to answer the following questions:
a. What would be the future value of $19,378 invested now if the money remains deposited for 8 years, the annual interest rate is 18%, and interest on the investment is compounded semi-annually?
b. How would you answer for (A) change if quarterly compounding were used?