Financial Math

If your expenses are more than your income, then you have a positive net cash flow. Please select the best answer from the choices provided T F

F

Based on the spreadsheet below, what is the net cash flow? a. $290 b. $390 c. $1,750 d. $2,040

A.

Ted is a single guy who's living the good life. The spreadsheet below shows Ted's cash flow for a month. Based on his monthly cash flow, explain what part of Ted's financial plan might be missing and why.

Answers will vary. Examples are: Ted's net cash flow is zero. Therefore, he might want to work on managing his income to get a positive net cash flow. There is no indication that Ted is putting any money in savings.He might want to work on his plan for managing his liquidity so he is prepared for an emergency.

Planning for the possibility that the plumbing in your house needs repair is part of a plan for _____. a. financing b. managing income c. managing liquidity d. protecting assets

C.

Based on the spreadsheet below, which of the following is a true statement? a. The net cash flow is negative. b. The net cash flow is zero. c. The net cash flow is positive. d. The net cash flow can't be determined.

c.

Create an example of a situation where there is a negative cash flow.

When cash inflow is less than cash outflow

Jim and Jackie are married with three children at home and a mortgage. Jim's net pay per year is $67,000 and Jackie does not have income. Their mortgage payment of $2,800 includes insurance on their home. They have additional monthly expenses of $2,700. Jim contributes 15% of his earnings to a retirement fund and they have $5,000 in savings. There is a $500,000 life insurance policy on Jim and a $100,000 policy on Jackie. As their financial advisor, what part of Jim and Jackie's financial plan would you encourage them to work on? a. They should work on their plan for managing income. b. They should work on their plan for managing their liquidity. c. They should work on their plan for protecting their assets. d. They should work on their plan for protecting their income.

a.

Justin is married with one child. He works 40 hours each week at a rate of $16 per hour. His wife began working part time after their daughter was born, but still contributes about $350 to the cash inflow each month. Their monthly cash outflow is generally about $3,000. They have a balance of $2,000 in their savings account. Justin has retirement contributions taken out of his paycheck at work. They have renter's, car and life insurance coverage. Based on this information, what part of their financial plan should Justin and his wife work on? a. managing income b. managing liquidity c. protecting assets d. retirement

a.

Kendra is working on her financial plan and lists all of her income and expenses in the spreadsheet below. What is Kendra's net cash flow? a. $295 b. $285 c. $275 d. $255

a.

The following list shows the items and prices for a restaurant order. Calculate the total amount if there is 7.5% tax and the customer leaves a 15% gratuity. 1 appetizer: $8.99 2 entrees: $14.99 each 1 entree: $12.99 3 drinks: $1.99 each a. $70.96 b. $71.62 c. $75.31 d. $75.97

a.

Glenda bought a new car with monthly payments of $357. Glenda manages to make her monthly car payments each month, but fails to perform the routine maintenance, like regular oil changes, because of the cost. To ensure that regular maintenance on her car can get done, which part of her financial plan should Glenda work on? a. financing b. income c. investing d. saving

b.

Rounded to the nearest thousandth, what is the decimal equivalent of 6 7/9? a. 0.067 b. 0.068 c. 0.677 d. 0.678

b.

Tamara earns $8 an hour at her job working 25 hours per week. If 22% of her paycheck goes to taxes, what is Tamara's monthly cash inflow? (Assume this is her only source of income and that there are 4 pays per month.) a. $176 b. $624 c. $778 d. $800

b.

The Anderson family wants to look at their cash flow over a year. They decide to write out their cash flow for 4 months as given in the spreadsheet below. In which of the months did they have the greatest net cash flow? a. January b. April c. August d. December

b.

What is meant by the term financial planning? a. Long-term goals are reached over an extended period of time, so your current income does not affect them. b. It is creating a road map of everything you do with your money. c. It is hoping you will have enough money to pay all your bills on time. d. If your income exceeds your expenses, you will be able to save money for the future.

b.

Which of the following products represents 6 3/4% tax, in dollars, on a price of $14.29? a. (0.00675)(14.29) b. (0.0675)(14.29) c. (0.675)(14.29) d. (6.75)(14.29)

b.

Which of the following would you list under cash inflows in a financial plan? a. You took a friend to lunch. b. You received a bonus at work. c. You got a discount on a new computer. d. You paid interest on a loan.

b.

Zalia meets her friend at the science museum to see a special exhibition. The admission to the museum is $12.50 plus tax. Zalia pays for herself and her friend. They have lunch at the museum's cafe. Zalia has a sandwich for $5.95, an apple for $1.25 and a drink for $1.69. She is charged tax and also tips her server 15%. If tax is 7.25%, how much did Zalia pay all total for her day at the science museum?

b.

By examining the spreadsheet below, what part of the financial plan might be missing? a. plan for managing income b. plan for financing c. plan for protecting assets d. plan for retirement

c

A family eats out at a restaurant and the total for their meals is $73.89. They also pay sales tax of 5.8% and leave a tip for their server. If the family leaves a total of $93, which of the following might be a description of the service they received? a. They left a 10% tip, so the service was probably below average. b. They left a 15% tip, so the service was probably average. c. They left a 20% tip, so the service was probably above average. d. They left a 25% tip, so the service was probably outstanding.

c.

Barry gets hurt at work and must go on disabililty for 4 months. On disability, the pay that Barry receives is 60% of his normal net pay. Barry should be fine if he has a plan for _____. a. financing b. managing his income c. managing his liquidity d. protecting his assets

c.

Clovis wants to make a surprise visit to his uncle who lives out of town. He purchases an airline ticket for $69. There is a 15% sales tax on the price of the airline ticket. In addition he must pay a baggage fee of $20. When he arrives at the airport, Clovis takes a taxi to his uncle's house which is 8 miles from the airport. The taxi fee is $2.50 per mile. If Clovis has spent a total of $123.35 for the airline ticket and taxi, at what percent of his fare did Clovis tip the taxi driver? a. 10% b. 15% c. 20% d. 25%

c.

Mr. Green orders some cookies from a local youth group. Using his order form shown below, complete the last column to find the total to be paid. Quantity Description Unit Price Total of Line 2 Krispy Kosmos $2.89 $ 1 Chewy Chocos $3.19 $ 1 Gooey Globs 2.99 $ Total $ 5.8% tax $ Total to be paid $ a. $9.60 b. $11.96 c. $12.65 d. $18.90

c.

Say that you are about to make a major purchase and would like to save money on sales tax. Which of these is a viable way to reduce the amount you will pay on sales tax? a. Sales tax is a tax like any other, so you can claim additional dependents and get a deduction on it. b. Businesses are allowed to charge a 1% fee for automatically calculating sales tax for you, so you should calculate the sales tax out yourself. c. Sales tax varies by state, so you can travel to a state with a lower tax rate and make your purchase there. d. If you buy an item on credit, the credit bureau must pay the sales tax instead of you, so you should make your purchase using a credit card.

c.

Using mental math, the approximate tip to leave for a bill of $81.79, if you tip 15% would be _____.. a. $8.20 b. $10.30 c. $12.30 d. $16.40

c.

You have a restaurant bill of $73.25. If you are taxed 7 1/2% and decide to tip your server 15%, how much is your total? a. $74.90 b. $89.44 c. $89.73 d. $90.56

c.

Kyle and Linda are married with two children at home and a mortgage. Kyle's net pay per year is $32,000 and Linda's is $48,000. Their monthly expenses are $3,500. Kyle and Linda each contribute 15% of their earnings to a retirement fund and they have $5,000 in savings. They also have a $100,000 life insurance policy on Kyle, but none on Linda. As their financial advisor, what part of Kyle and Linda's financial plan would you encourage them to work on and why? a. Their plan for managing income. Their net cash flow is negative. b. Their plan for managing their liquidity. They are not prepared for emergencies. c. Their plan for retirement. They don't contribute enough to meet their long term goals. d. Their plan for protecting their assets. They should have life insurance on Linda.

d.

Mariah is single and has a monthly disposable income of $3,200. Her monthly cash outflow is approximately $2,800. Mariah includes contributions to a retirement plan and money for investments as part of her cash outflow. She has car insurance and a life insurance policy. Mariah has saved $15,000, but wishes to use $10,000 for a down payment on a house. She has also purchased furnishings for a house, which she has in the spare bedroom of her apartment. Mariah hires a financial planner to examine her money management, and he determines that her plan needs work. What part of Mariah's financial plan would he encourage her to work on and why? a. Her plan for managing income. Her net cash flow is negative. b. Her plan for managing her liquidity. She is spending all of her savings on her down payment. c. Her plan for retirement. She does not have a retirement plan set up. d. Her plan for protecting her assets. In case of an emergency, she should have renters insurance for her apartment.

d.

Matthew bought 4 new compact discs at $16.99 each and a carrying case for $35.89. He paid 2007-03-04-00-00_files/i0250000.jpg% sales tax on his purchases. If Matthew paid $112.42 total, determine if he paid the correct amount. a. Matthew paid $0.15 too little for his purchases. b. Matthew paid $0.16 too much for his purchases. c. Matthew paid $0.05 too much for his purchases. d. Matthew paid the correct amount for his purchases.

d.

The Changs updated their bedroom by purchasing a new lamp for $89.95 and a comforter set for $239.99. 6 3/5% sales tax on their purchases. If the Changs paid $351.72 total, determine if they paid the correct amount. a. The Changs family paid $0.33 too much for their purchases. b. The Changs family paid $0.99 too much for their purchases. c. The Changs family paid $5.94 too much for their purchases. d. The Changs family paid the correct amount for their purchases.

d.

Tracy goes on a 3 day and night school band trip. There is no cost for travel and each band member only pays half the cost of the hotel room. However, each person is responsible for the cost of their own meals. His portion of the hotel bill is $49 per night and Tracy leaves a 10% tip for the maid service. Before tax, Tracy spends $32 per day on eating out plus 15% of this amount in tips. If Tracy spends a total of $280.74 on the band trip, what percent tax was Tracy charged on his food? a. 6% b. 7% c. 8% d. 9%

d.

Tyrone's hourly wage is $18 and his net pay is 72% of his earnings. Tyrone spends about $1,800 on his monthly expenses. If Tyrone works 40 hours per week and has no other sources of income, what is his total monthly cash inflow? (Hint: Assume that there are 4 pay periods per month.) a. $273.60 b. $1,080.00 c. $1,800.00 d. $2,073.60

d.

Which of the following spreadsheets shows the financial plan with the greatest net cash flow?

d.