Short-term loans that charge very high interest rates

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1. Compute the future value in year 8 of a $3,500 deposit in year 1 and another $3,000 deposit at the end of year 3 using a 10 percent interest rate.

2. Compute the present value of a $2,200 deposit in year 3 and another $1,700 deposit at the end of year 5 if interest rates are 8 percent

3. Given a 7 percent interest rate, compute the present value of payments made in years 1, 2, 3, and 4 of $1,200, $1,400, $1,400, and $1,700.

4. Payday loans are very short-term loans that charge very high interest rates. You can borrow $275 today and repay $330 in two weeks. What is the compounded annual rate implied by this 20 percent rate charged for only two weeks.

Reference no: EM131837508

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