Okay you finance geniuses - here is a question for you...

[-SD-]

cool. I will use that - what should I say the rate is from though?

Dude I approach everything like it is rocket science. Funny story - after college me I was doing some research and me and a buddy were at a bar... Some girls we met asked us what we did - so we said "genetic research" (the truth)

The girl laughed and said "that is BS! Why not just say "I am a rocket scientist!" "

(how the fuck do you quote a quote in a quote anyway? LOL

Say its the average of the stock market return over that time (10%) and the return you could have gotten letting it sit in safe CD's (5%).

 

[Spartacus]

The prime rate, as reported by the Wall Street Journal's bank survey, is among the most widely used benchmark in setting home equity lines of credit and credit card rates. It is in turn based on the fed funds rate, which is set by the Federal Reserve

 

[Spartacus]

add 3 percentage points to the federal funds rate and you have the "prime" rate
1994 was an interesting year

 

[Becoming]

federal funds rates 1994

average 4.2016666666666666666666666666667

compounded quarterly 68.87

superdave 5% cd compounded quarterly? 76.31

I figure to use both of these and let him figure it out...

sound like a good solution?

 

[Spartacus]

Description,"Market yield on U.S. Treasury securities at 20-year constant maturity, quoted on investment basis"
,Note,"Yields on actively traded non-inflation-indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasury published a factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year nominal rate. The historical adjustment factor can be found at www.treas.gov/offices/domestic-fina...terest-rate/ltcompositeindex_historical.shtml. Source: U.S. Treasury."


DATE , TCMNOMY20
1993, 6.29
1994, 7.49
1995, 6.95
1996, 6.83
1997, 6.69
1998, 5.72
1999, 6.20
2000, 6.23
2001, 5.63
2002, 5.43
2003, 4.96
2004, 5.04
2005, 4.64
2006, 5.00

 

[SpyWizard]

but.. it was a personal loan, which if a risk assessment were completed, the interest rate should be more like 21%-29% interest, similar rates that credit card companies charge.. just check for usery requirements in your state.. Minnesota is 31%

 

[Becoming]

add 3 percentage points to the federal funds rate and you have the "prime" rate
1994 was an interesting year

dude your last 3 posts just confused the hell out of me

so the real avg was 7.2016666666666666666666666666667?

 

[Spartacus]

Description,"Market yield on U.S. Treasury securities at 20-year constant maturity, quoted on investment basis"
,Note,"Yields on actively traded non-inflation-indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasury published a factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year nominal rate. The historical adjustment factor can be found at www.treas.gov/offices/domestic-fina...terest-rate/ltcompositeindex_historical.shtml. Source: U.S. Treasury."


DATE , TCMNOMY20
1993, 6.29
1994, 7.49
1995, 6.95
1996, 6.83
1997, 6.69
1998, 5.72
1999, 6.20
2000, 6.23
2001, 5.63
2002, 5.43
2003, 4.96
2004, 5.04
2005, 4.64
2006, 5.00

so these US treasury rates are as conservative as you can get
add 2% to each and compound away

as I said 1994 was an interesting year

 

[digimon7068]

The guy owes me 40 bucks.

So hypothetically I invested 40 bucks in 1994-he insists (however you think is most appropriate). What would it be worth today?

how would you solve the issue?

depends entirely on your assumed rate of return. . .

 

[Spartacus]

dude your last 3 posts just confused the hell out of me

so the real avg was 7.2016666666666666666666666666667?

the discount rate is what the govt charges banks to borrow money
banks need to have I think 10% actual cash on hand to cover demand deposits(checking accounts etc.)

so the fed rate is what money costs banks
and in essence is what banks have to pay to get money to loan you
they add 3 percentage points to the fed rate to get "prime"
and prime is,well prime

so if you present your bud with the fed rates and add 3 points your charging him a very fair prime rate