**THIS IS ONLY THE 9 QUESTIONS THAT ARE LISTED
BELOW!**

### WEEK 4 HOMEWORK: TEXTBOOK (100 PTS)

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There are three (3) types of textbook based homework items located at the end of each chapter. These include Discussion Questions (DQ), Exercises (E), and Problems (P). Some homework items have been custom created.

**Complete the following from the textbook:
**

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

## Exercises

**1**Go to the Federal Reserve website,
__
____
http://www.federalreserve.gov
__. Go to “Economic Research and Data,” and access “Consumer
Credit.” Find interest rates charged by commercial banks on new
automobile loans, personal loans, and credit card plans.

- Compare the current or recent level of interest rates among the three types of loans.
- Compare trends in the cost of consumer credit provided by commercial banks over the past three years.

##

Problems

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

- What would be the future value if the interest rate is a simple interest rate?
- What would be the future value if the interest rate is a compound interest rate?

**3**Determine the future values if $5,000 is invested
in each of the following situations:

- 5 percent for ten years
- 7 percent for seven years
- 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.

- What would be the future value of your investment?
- Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment's future value in terms of purchasing power?
- What would be the investment's future value in terms of purchasing power if inflation occurs at a 9 percent annual rate?

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

**7**Determine the present value 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 you had to wait six years
to receive the $15,000?

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

- What would be the future value of $15,555 invested now if it earns interest at 14.5 percent for seven years?
- What would be the future value of $19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18 percent?

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

- 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 percent?
- How would your answer change in (a) if the $359,000 is to be received at the end of 20 years?

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

- What would be the future value 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 semi-annually?
- How would your answer for (a) change if quarterly compounding were used?

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