1. What is the future value of an ordinary annuity of $12,000 per year, for three years, at
9% interest compounded annually? A. $39,337.20 C. $36,000.00 B. $39,240.00 D.
$14,442.75
Following is the formula to calculate future value of annuity
Future value of annuity = Cash flows * Future value interest factor
F.V.A = cash flows * (FVIF)
=$12,000 * 3.2781
=$39,337.2
2. Nick has a revolving department store credit card account with an annual percentage
rate of 15%. Last month's balance on the account was $423.78. During the current month,
he made purchases totaling $123.42 and made a payment of $100. The store uses the
unpaid balance method. According to this information, what must be the amount of the
finance charge? Round your answer to the nearest cent. A. $5.30 C. $6.36 B. $5.59 D.
$6.71 3.
Using the information provided in Question 2, what is Nick's current account balance? A.
$380.12 C. $452.50 B. $441.61 D. $453.56 4.
On a balance sheet, the accounts of notes payable, salaries payable, and taxes payable
would fall under the category of A. current liabilities. C. current assets. B. investments
and other assets. D. long-term liabilities.
5. A company purchased an air conditioning system for $10,200. The shipping charges on
the system were $875, and the setup costs were $1,250. The system is expected to last for
five years and has a residual value of $2,000. If you use the straight-line method to
calculate the depreciation for this air conditioning system, what would be the annual
depreciation? A. $2,000 C. $2,065 B. $2,040 D. $2,465
6. Which of the following are the four elements that are included in the total amount of a
mortgage payment? A. The principal, the interest, the tax, and the insurance B. The
principal, the rate, the time, and the interest C. The title, the closing costs, the closing
statement, and the deed D. The ARM, the PMI, the VA, and the FHA
7. Imagine that you're the manager of an auto parts store. Figure A-2 contains your
records of annual inventory figures for windshield wipers. Using the FIFO method of
inventory pricing, what is the dollar value of ending inventory if there were 300 units on
hand on December 31? Round your answer to the nearest dollar. A. $3,188 C. $3,350 B.
$3,219 D. $3,600
Art's Auto Parts—Annual Inventory of Windshield Wipers January 1 Beginning
Inventory300 units @ $11.00 March 15 Purchase 150 units @ $10.50 June 10 Purchase
200 units @ $10.75 September 22 Purchase 175 units @ $10.00 December 10 Purchase
100 units @ $12.00
8. Using the information shown in Figure A-2, suppose that the ending inventory on
December 31 was 500 units. What would be the dollar value of the ending inventory
using the LIFO method of inventory pricing? Round your answer to the nearest dollar. A.
$5,450 C. $5,363 B. $5,413 D. $5,225
9. Which of the following is known as the accounting equation? A. assets = liability +
owner's equity B. profit = revenue – total expenses C. return on investment = net income
owner's equity D. gross profit margin = gross profit
net sales
10. What would be the monthly payment on a $90,000 mortgage at a rate of 7.5% interest
for 30 years? A. $136.80 C. $630.00 B. $562.50 D. $636.30
11. Wallace and Sarah have decided to purchase furniture for their new home. They have
two payment options. The first option is to pay a cash payment of $4,200. The second
option is to finance the furniture with a two-year installment loan. The loan requires a
12% down payment and 24 equal monthly payments of $195. According to this
information, what would be the finance charge on the loan? A. $3,696 C. $504 B. $984
D. $175
12. Using the information in Question 11, what is the total deferred payment price of the
furniture? A. $4,200 C. $5,184 B. $4,680 D. $5,664
13. The Patel family recently purchased a home, taking out a mortgage of $235,000 at 8
3/4% for 25 years. The annual property taxes on the home are $6,345, and the annual
hazard insurance premium is $1,479. What is the monthly PITI payment of their loan? A.
$2,729.40 C. $1,849.45 B. $2,586.05 D. $652.00
14. How much money must be deposited now, at 6% interest compounded semiannually,
to yield an annuity payment of $4,000 at the beginning of each six-month period, for a
total of five years? Round your answer to the nearest cent. A. $38,120.80 C. $31,144.40
B. $35,144.44 D. $29,440.36
15. When you're preparing an income statement, to calculate gross margin, you must
subtract A. sales discounts and sales returns and allowances from gross sales. B. cost of
goods sold from net sales. C. income tax from income before taxes. D. total operating
expenses from net sales.
16. Figure A-3 lists financial information for the month of September for a large clothing
store. Using the retail method of inventory, estimate the value of the ending inventory at
cost onSeptember 30. A. $12,283 C. $140,432 B. $115,000 D. $143,750
17. The method used to calculate depreciation for federal income tax purposes is the A.
sum-of-the-years' digits method. B. declining-balance method. C. units-of-production
method. D. modified accelerated cost recovery system method.
18. What sinking fund payment would be required at the end of each three-month period,
at 8% interest compounded quarterly, in order to amount to $20,000 within five years? A.
$1,223.13 C. $823.13 B. $1,156.51 D. $437.04
19. Brenda bought a swimming pool by obtaining an 8% add-on interest installment loan
from the bank. The pool cost $2,400, and the bank required a 15% down payment and
equal monthly payments for two years. How much is Brenda's monthly payment? A.
$85.00 C. $98.60 B. $86.36 D. $116.00
Brandy's Boutique Financial Highlights for September 1–September 30 Cost Retail
Beginning Inventory $575,000 $718,750 Net Purchases (September) $60,000 $75,000
Net Sales (September) $650,000
20. Shawn bought a home with an adjustable-rate mortgage. The margin on the loan is
2.7%, and the rate cap is 7.2% over the life of the loan. If the current index rate is 4.3%,
what is the initial interest rate of the ARM? A. 7% C. 11.5% B. 9.9% D. 14.2%
21. Which of the following is the bottom line on the income statement? A. The gross
margin C. The total operating expenses B. The net sales D. The net income (or loss)
22. A party supplies store recorded net sales of $423,400 for the year. The store's
beginning inventory at retail was $105,850 and its ending inventory at retail was
$127,020. What would be the inventory turnover at retail, rounded to the nearest tenth?
A. 1.8 C. 3.6 B. 3.3 D. 4.0
23. Ramon owns a home that was appraised for $132,600. The balance remaining on his
existing mortgage is $43,260. Ramon's credit union is willing to loan an amount up to
70% of the appraised value of a home. Based on this information, what is the maximum
potential amount of credit that's available to Ramon for a home equity loan? A. $92,820
C. $62,538 B. $89,340 D. $49,560
24. What amortization payments would be required every six months, at 14% interest, to
pay off a $35,000 loan within four years? Round your answer to the nearest cent. A.
$7,544.96 C. $5,120.60 B. $5,861.37 D. $3,051.62
25. Cassandra is repaying an installment loan of $3,500 with 20 equal monthly payments
of $196 each. What is the annual percentage rate of the loan? A. 7.55% C. 12% B.
11.16% D. 13.25%
26. The LaGuardia family's total living expenses are $63,000 a year. After the death of
the insured, the total family income would be $55,000. How much life insurance is
required to cover the dependents' income shortfall, if the prevailing interest rate is 4%?
A. $137,500 C. $200,000 B. $157,500 D. $295,000
27. Last month, Bob took a cruise from Florida to the Bahamas. The cost of his roundtrip ticket was $832. The federal excise tax on the cruise was 8%, and Florida has a sales
tax rate of 6%. What was the total purchase price of Bob's ticket? A. $832.00 C. $898.56
B. $881.92 D. $948.48
29. A company declared a dividend of $2,200,000. The company has 55,000 shares of
common stock outstanding. What are the dividends per share of common stock? A. $0.40
per share C. $40 per share B. $4 per share D. $400 per share
30. A mutual fund has total assets of $57,000,000 and liabilities of $8,550,000. If
15,960,000 shares are outstanding, what is the net asset value of the fund? A. $1.30 per
share C. $3.28 per share B. $3.04 per share D. $4.80 per share
33. Sam bought a stereo for a total of $676.24, including state sales tax. The state sales
tax rate is 7%. What was the total amount of sales tax on the stereo? A. $632.00 C.
$47.34 B. $85.59 D. $44.24
34. The Shawnee Company paid a dividend of $0.42 per share last year. If the current
selling price of the stock is $27.38, what is the current yield on the stock? A. 0.7% C.
1.7% B. 1.5% D. 6.5%
36. When discussing stocks, the term proceeds refers to A. the fee the stockbroker
charges to assist with the sale or purchase of stocks. B. the amount an investor is earning
on a stock as compared with other investments. C. stocks that don't have a par value. D.
the amount of money an investor receives after selling a stock.
37. A street vendor recorded the following hot dog sales for the week: 100 on Monday,
87 on Tuesday, 95 on Wednesday, 125 on Thursday, 210 on Friday, 250 on Saturday, and
57 on Sunday. What is the mean sales per day? A. 210 C. 132 B. 185 D. 57
38. What is the purchase price of fifteen Columbia Corporation bonds with a coupon rate
of 73/4 and a current market price of 98? The commission charge is $8 per bond. The
date of the transaction is March 1, and the bond pays interest on November 1 and May 1.
A. $15,207.45 C. $12,811.33 B. $13,206.50 D. $1,013.83
39. A property insurance policy has an annual premium of $780. What is the regular
refund if the policy is canceled by the insurance company after five months? A. $455.00
C. $156.00 B. $325.00 D. $111.43
40. What is the total amount of tax due on a property with an assessed value of $315,200?
The property tax rate is 53.7 mills. A. $169,262.40 C. $5,869.65 B. $16,926.24 D.
$315.00
41. Determine the median of the following numbers: 25, 28, 22, 27, 25, 20, 30, 23, 27,
and 29. A. 25 C. 27 B. 26 D. 28
42. Leona purchased 1,200 shares of the Lakeview Mutual Fund at an offer price of $4.20
per share. She later sold the shares at a net asset value of $4.95 per share. During the time
Leona owned the shares, Lakeview paid a dividend of $0.42 per share. What is her return
on investment? A. 27.9% C. 10.7% B. 17.9% D. 3.6%
43. Which of the following is a type of vehicle insurance that covers damage sustained by
the insured's vehicle in an accident? A. Collision C. Comprehensive B. Liability D.
Deductible
44. Martha Stevens has a tax liability of $6,420 and owes additional taxes amounting to
$235.She is entitled to one tax credit of $374 and another credit of $563. If her employer
withholds$260 every two weeks from her pay, Martha will A. receive a refund of $340.
B. receive a refund of $1,042. C. owe taxes amounting to $340. D. owe taxes amounting
to $1,042.
45. Find the range of the following set of numbers: 247, 562, 498, 149, 568, 327, and
470. A. 498 C. 419 B. 470 D. 403
46. A life insurance policy that pays whether the policyholder lives or dies is called A.
premium insurance. C. term insurance. B. face value insurance. D. permanent
insurance.
47. A frequency distribution is obtained by A. listing the values in sets of data
individually. B. taking the difference between the highest and the lowest value in each set
of data. C. summing the values of a set of data and dividing by the number of values in
the set. D. dividing a set of data into equal-size classes.
48. When a bond is selling for more than its par value, it is selling at a A. coupon rate. C.
discount. B. premium. D. debenture.
49. Find the mode of the following list of prices: $1.67, $1.29, $0.79, $1.29, $0.89,
$0.89,$0.79, $1.67, $0.79, $0.57, and $0.79. A. $0.57 C. $0.89 B. $0.79 D. $1.67
50. If you buy eight bottles of soda that cost $1.29 each and the sales tax rate is 6%, what
willbe the total amount of your purchase? Round your answer to the nearest cent. A.
$9.71 C. $10.94 B. $10.32 D. $16.32
A tip is a nice way to say thank you.