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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
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.
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