What would be investments fv in terms of purchasing power

Assignment Help Finance Basics

Reference no: EM131349316

PROBLEMS

1. Go to the Federal Reserve Web site, https://www.federalreserve.gov. Click on the Consumer Information tab, and research consumer credit in the various hyperlinks. Find average interest rates charged by commercial banks on new automobile loans, personal loans, and credit card plans.

a. Compare the average level of interest rates among the three types of loans.

b. Click on the Economic Research & Data tab, click on the "Statistics: Releases and Historical Data" hyperlink and then "Consumer Credit," and compare trends in the cost of consumer credit provided by commercial banks over the past three years.

2. Find the FV of $10,000 invested now after five years if the annual interest rate is 8 percent.

a. What would be the FV if the interest rate is a simple interest rate?

b. What would be the FV if the interest rate is a compound interest rate?

3. Determine the future values (FVs) if $5,000 is invested in each of the following situations:

a. 5 percent for ten years
b. 7 percent for seven years
c. 9 percent for four years

4. You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding.

a. What would be the future value (FV) of your investment?

b. Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment's FV in terms of purchasing power?

c. What would be the investment's FV in terms of purchasing power if inflation occurs at a 9 percent annual rate?

5. Find the present value (PV) of $7,000 to be received one year from now assuming a 3 percent annual discount interest rate. Also calculate the PV if the $7,000 is received after two years.

Reference no: EM131349316

Questions Cloud

What inference can you draw from the numbers collected : FIN 100- Using only.gov Websites report the current GDP, the current Federal deficit, the current Federal debt. What inference can you draw from the numbers collected?

Review the picot article evidence-based practice : NRS-433V: Review the PICOT article "Evidence-Based Practice, Step by Step: Asking the Clinical Question: A Key Step in Evidence-Based Practice" along with the "Chapter 18: Using Research in Evidence-Based Nursing Practice" PowerPoint resource.

Is it possible for electrons to be trapped in a sandwich : Is it possible for electrons to be trapped in a sandwich like this?

Determine the heat transfer and entropy production rates : Determine the heat transfer and entropy production rates per unit mass flow rate if The presence of the water vapor is ignored.

What would be investments fv in terms of purchasing power : FIN 100- Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment's FV in terms of purchasing power?

Human resource management practices within organization : Why the human resource function should be aligned with an organizations strategic plan, and How current global conditions in Maersk's industry impact human resource management practices within this organization.

Describe the discovering relationships and building models : HLT-362V : Describe the error in the conclusion. Given: There is a linear correlation between the number of cigarettes smoked and the pulse rate. As the number of cigarettes increases the pulse rate increases. Conclusion: Cigarettes cause the puls..

Discount rate be before you would reject the project : A project that costs $69,215.00 to install will provide annual cash flows of $20,000.00 for each of the next 12 years. Calculate the NPV if the discount rate is 29.10%? How high can the discount rate be before you would reject the project (i.e. What ..

What would be the future value of given amount invested now : FIN 100- Use a financial calculator or computer software program to answer the following questions: What would be the future value (FV) of $15,555 invested now if it earns interest at 14.5 percent for seven years?

User Account

All Pages