Even complicated and confusing topics will be easily developed and covered if you request our help writing an essay. Place an order today!

If the Fed decides to raise interest rates next year, what effect would rising rates have upon the following: (1) Consumer financing for big-ticket items such as autos and home.
BACKGROUND INFORMATION: During the Carter administration, long-term US Treasury yields exceeded 15%, and short-term T-Bills yielded near 20%. After Reagan’s inauguration, interest rates began to fall as Fed Chairman Volcker’s restrictive monetary policy succeeded in containing inflation. Over the past 25 years, US rates have steadily declined: T-Bills are hovering under 1% and the long bond is yielding about 4%.

Lately, though, rising oil prices have incited inflationary forces. China and other developing nations have increased their consumption for oil, metals, materials, and food. Thus, both foreign and domestic factors have spurred demand and are contributing to rising prices on a global scale. In addition to this commodity-induced inflation, US consumers are faced with rising costs for essential services such as healthcare and education.

The Chairman of the Federal Reserve, Ben Bernanke, is faced with a dilemma. Should the Fed increase rates to contain inflation; or, should the Fed keep rates very low to spur the US economy which is beset by a collapse in home values, an extensive banking crisis, and a faltering stock market?

YOUR ASSIGNMENT: Given this economic background…Compose a 4-6 page report, double-spaced, on the following topic: If the Fed decides to raise interest rates next year, what effect would rising rates have upon the following: (1) Consumer financing for big-ticket items such as autos and homes; (2) the present and future values of annuities; (3) the NPV calculation; (4) the WACC; (5) corporate earnings?

Be sure to illustrate your report with relevant financial numbers. Hint: for topic (3), above, one approach you might adopt is to cite the NPV calculation from previous case problems, then to contrast it against a new calculation performed with a higher interest rate. Cite the numeric effect upon the NPV, and then explain its rationale and its significance. This is the kind of “numeric illustration” that you should provide for each of the five topic sections.

Is this the question you were looking for? Place your Order Here

testimonials icon
Part 1: Researching Ethics Explain how journalistic ethics affects marketing public relations professionals.E...
testimonials icon
/*! elementor - v3.6.5 - 27-04-2022 */ .elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading...
testimonials icon
1.Determine the...
testimonials icon
discussion - should be 150 wordsIdentify a skill that you learned in this course Principles of Accounting I and explain how you...
testimonials icon
-Question 1: Does the formula for falling bodies give accurate or inaccurate results when a feather is dropped How about when a ball is dropped...
testimonials icon
Order Grade A+ Academic Papers Instantly!...
testimonials icon
What are specific actions that health professionals can take regardless of their practice area and site to promote population and communit...
testimonials icon
Assignment 2: Public University Analysis Due Week 9 and worth 240 points Select a public university system and review the financial statement...
testimonials icon
CS 351: Systems ProgrammingThe Attack Lab: Understanding Buffer Overflow Bugs1 IntroductionThis assignment involves generating a total of five at...
testimonials icon
Some macro and micro economic arithmetic.There's not a lot of work.I hope you can give it to me as soon as possible...

Other samples, services and questions:

Calculate Price

When you use PaperHelp, you save one valuable — TIME

You can spend it for more important things than paper writing.

Approx. price
$65
Order a paper. Study better. Sleep tight. Calculate Price!
Created with Sketch.
Calculate Price
Approx. price
$65