# Compare the average level of interest rates among the three types of loans, FIN 100 Homework

Complete the following from the
textbook:

• Chapter 9: E1, P2, P3, P4, P5, P6, P7, P16, P17, P19

E1

1.
Go to the Federal Reserve Web site, http://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.

P2

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?

P3

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

P4

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

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 9

percent annual rate?

P5

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

P6

6.
Determine the present values (PVs) if \$5,000 is received in the future (i.e. at
the end of each indicated time period) in each of the following situations:

a. 5 percent for ten years

b. 7 percent for seven years

c. 9 percent for four years.

P7

7.
Determine the present value (PV) if \$15,000 is to be received at the end of
eight years and the discount rate is 9 percent. How would your answer change if

P16

16.
Use a financial calculator or computer software program to answer the following
questions:

a. What would be the future value (FV) of
\$15,555 invested now if it earns interest at 14.5

percent for seven years?

b. What would be the FV of \$19,378
invested now if the money remains deposited for eight

years and the annual interest rate is
18 percent?

P17

17.
Use a financial calculator or computer software program to answer the following
questions:

a. What is the present value (PV) of
359,000 that is to be received at the end of twenty-three

years if the discount rate is 11
percent?

the \$359,000 is to be received at the end of twenty

years?

P19

19.
Use a financial calculator or computer software program to answer the following
questions:

a. What would be the future value (FV) of
\$19,378 invested now if the money remains

deposited for eight years, the annual
interest rate is 18 percent, and interest on the

investment is compounded semiannually?