question 14

CHAPTER 5 Discounted Cash Flow Valuation 157 LO 4 14. Calculating EAR First National Bank charges 14.3 percent compounded monthly on its business loans. First United Bank charges 14.7 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan? LO 4 15. Calculating APR Vandermark Credit Corp. wants to earn an effective annual return on its consumer loans of 13.9 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? Explain why this rate is misleading to an uninformed borrower. LO 4 16. Calculating Future Values What is the future value of $1,150 in 16 years assuming an interest rate of 7.9 percent compounded semiannually? LO 4 17. Calculating Future Values Streamsong Credit Bank is offering 4.7 percent compounded daily on its savings accounts. If you deposit $4.750 today, how much will you have in the account in 5 years? In