Midterm Review Questions
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Chapter 6 - Employment
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Pay periods & hourly rate
Vacation time
Piecework pay
Royalties
Social Security & Medicare
Chapter 6 - Employment
• In 2008, Yolanda paid $3,875 in Social Security
tax. If the Social Security tax rate was 6.2% to
the maximum income of $94,200 that year,
what was Yolanda’s taxable income?
$3,875 is 6.2% of what?
$3,875 = 0.062 x
X = $62,500
Chapter 6 - Employment
• In 2005, Lee began working as a nurse anesthetist
with a taxable income of $100,000. The Medicare
tax was 1.45% and the Social Security tax rate was
6.2% to the maximum income of $90,000 that
year. How much did Lee pay in FICA tax in
2005? Total: $7,030
Medicare
Social Security
(90,000) (0.062) (100,000) (0.0145)
X = $1,450
X = $5,580
Chapter 6 - Employment
• Cataline works part-time at a bakery earning
$9.50 an hour. In the last five days, her time
card shows that she worked 3.3, 2.9, 4.0, 3.5,
and 2.1 hours. What is her gross pay for the
five days?
Total Hours: 15.8
Gross Pay: $150.10
Chapter 6 - Employment
• Miguel pays $25 semimonthly for health
insurance, which is 20% of the total cost. His
employer pays the rest. What is the total
costs, to the nearest dollar, of Miguel’s health
insurance?
$600 per year
600 = 0.20 x
X = $3,000
Chapter 6 - Employment
• Pimmi gets paid $1.50 for the first 50 craft kits
that she assembles. She earns $2.00 for each
kit over 50. This week she assembled 135 kits.
How much did she earn?
First 50:$75
Last 85:$170
Total Pay: $245
Chapter 6 - Employment
• Singh works at a restaurant where he is paid
by the hour plus time-and-a-half for his hours
over 40. Last week he worked 3 hours
overtime and his gross pay was $382.70.
What is his hourly wage?
40x + 3(1.5)x = 382.70
44.5x = 382.70
X = $8.60
Chapter 6 - Employment
• Maryanne began a job that gives her 3 days of
vacation each year she is employed, up to a
maximum of 21 days of vacation time. How
many years will it take her to reach the
maximum amount of vacation time?
7 Years
Chapter 3 – Interest/Banking
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Checking Accounts
Reconciling a check register
Savings Accounts
Simple Interest
Compound Interest
Continuously Compounding Interest
APY
Future Value of an investment
Chapter 3 – Interest/Banking
• Conrad Savings Bank has a $25 overdraft fee.
On Friday, Mr. McQuire deposited his
paycheck of $468.92 bringing his account total
to $712.34. The next morning, his wife wrote
a check for $1,267.45 for a new refrigerator
and stove. What is the balance in the
McQuire account when the check for the
refrigerator and stove is cleared, assuming no
more money is deposited into the account?
- $580.11
Chapter 3 – Interest/Banking
• LaToya has $113.94 in her checking account.
During the week she goes to an ATM and
withdraws $40. She is charged a usage fee of
$2.50. The following week she deposits her
paycheck of $189.73. She writes two checks,
one for $22.50 and the other for $70.18.
What is the current balance in her checking
account?
$168.49
Chapter 3 – Interest/Banking
• Amy opened a savings account with $1,500
she received for graduation. The account pays
2.4% simple interest. What is the balance
after 6 months?
I = Prt
I = (1,500) (0.024) (6/12)
I = $18
Balance: $1,518
Chapter 3 – Interest/Banking
• What is the interest earned on $10,000 for
four years, at an interest rate of 3.5%
compounded continuously?
B = Pe^(rt)
B = (10,000) e^(4*0.035)
B = $11,502.74
Chapter 3 – Interest/Banking
• Houng deposits $5,000 into an account that
earns 4% interest compounded daily. What is
the annual percentage yield (APY) to the
nearest hundredth percent (2 decimal
places)?
B = $5,204.04
APY = 4.08%
Chapter 3 – Interest/Banking
• Jackson deposited $3,500 at 2.5% interest,
compounded continuously, when he was 18
years old. How much will be in the account
when he is 40 years old if he made no other
deposits or withdrawals?
B = $6,066.39
Chapter 3 – Interest/Banking
• Tammy sold a diamond ring for $10,000. She
placed half of the money into a CD with a
3.9% interest rate compounded daily. She
placed the other half into a CD with the same
interest rate which is compounded annually.
What is the difference in the interest earned
on each amount after 5 years?
B = $44.83
Chapter 3 – Interest/Banking
• Edward wants to have $45,000 in 6 years for
college. What should he deposit now into an
account that pays 4.5% interest, compounded
daily, to meet his goal?
P = $34,352.65
Chapter 3 – Interest/Banking
• Margarite wants to take a trip to Japan in 3
years. She knows she will need about $5,000.
How much should she deposit into an account
now that pays 3.5% interest compounded
daily, in order to meet her goal?
$4,501.65
Chapter 3 – Interest/Banking
• Queens Meadow Bank charges a monthly
maintenance fee of $15 and a check writing
fee of $0.10 per check. Last month, mark
wrote a total of 50 checks from his account.
What was the total of all fees he paid on that
account?
Per Check Fee:$5
Monthly Fee: $20
Chapter 3 – Interest/Banking
• How much more would $5,000 earn in 10
years in an account compounded continuously
than an account compounded quarterly if the
interest rate on both accounts is 3.7%?
Continuously: $7,238.67
Quarterly: $7,226.37
Difference: $12.30
Chapter 4 – Consumer Credit
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Saving up for an item & rounding
Down Payment
Installment Plans
Credit Score
Chapter 4 – Consumer Credit
• Jerry buys a $5,000 motorcycle on a deferred
payment plan. There is no down payment and
no interest for eighteen months. Jerry must
make a minimum payment of $150 a month.
To avoid a retroactive APR of 21%, he must
pay the balance in full before the 18 months
has passed. If he pays $150 each month, how
much should he pay the last month to avoid
the interest charge?
$ 2,450
Chapter 4 – Consumer Credit
• Sara wants to save up to buy a new tv. The tv
she wants cost $1,800.00. If Sara can save
$175 a month, how long will it be before she
can purchase the tv?
11 Months
Chapter 4 – Consumer Credit
• Jesse purchases a furniture set for $2,500 on
an installment plan. He must give a 15% down
payment and pay a monthly fee of $151.04 for
two years. How much will Jesse end up paying
for the furniture set?
Down Payment - $375
Monthly Payments - $3,624.96
Total Paid - $3,999.96
Chapter 4 – Consumer Credit
• Jesse purchases a furniture set for $2,500 on
an installment plan. He must give a 15% down
payment and pay a monthly fee of $151.04 for
two years. How much will Jesse end up paying
for the furniture set?
Down Payment - $375
Monthly Payments - $3,624.96
Total Paid - $3,999.96