Federal Reserve-Compare the average level of interests
Subject: Business / Finance
Question
Chapter 9
E1. Go to the Federal Reserve website, http://www.rederalreserve.gov.
Go to economic research data, and access recent statistical releases and the consumer credit. Find average interest rates charged by commercial banks on new automobile loans, personal loans, and credit card plans.
a. Compare the average level of interests among the three types of loans.
b. Access historical data and the n consumer credit, and 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 no after five 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 future value if the interest rate is a compound interest rate?
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P4. You are planning to invest $2,500 today for three years at nominal interest rate of 9% with annual compounding.
a. What would be the 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?
P7. Determine the present value if $15,000 is to be received at the end of 8 years and the discount rate is 9%. How would your answer change if you had to wait 6 years to receive $15,000?
P16. Use a financial calculator or computer software program to answer the following questions:
a. What would be the future value of $15,555 invested now if it earns interest at 14.5% for 7 years?
b. What would be the future value of $19,378 invested now if the money remains deposited for 8 years and the annual interest rate is 18%?
P19. Use a 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 compounding semiannually?
b. How would your answer for (a) change if quarterly compounding were used?
