Reference no: EM132844106
Problems - Present Value, Future Value, and Interest Rate
1. José López has $ 15,000 in a 6-year certificate of deposit (CD) that pays a guaranteed annual rate of 4%. He draws up a timeline showing when the cash flows will occur.
2. Oliver López deposits $ 12,000 in a bank account that pays 7% annual interest. He calculates the account balance after 5 years.
3. Carmen Hernández has saved $ 8,000 for a car deposit. The highest monthly payment she can afford is $ 455. The loan will have an APR of 11% due at the end of each month. Determine the most expensive car she can buy if she buys it on 60-month credit.
4. Determine the present value of a financial instrument that pays $ 18,500 in 10 years if similar risk instruments pay 6% per year.
5. Calculate the future value (FV) of a $ 5,000 investment at an interest rate of 10% over 7 years.
6. Determine the interest rate you will pay, if you are approved for a loan for $ 112,000 with annual payments of $ 15,000 over 8 years.