Math Test 3
_________ loans differ from installment loans in that you are not required to pay off your balance in any set period of time.
Credit card
$2000 is invested at an APR of 1.8% for 2 years.
$2072.65
$16,000 is invested at an APR of 2.3% for 17 years.
$23,550.80
______, or income, represent money that has been collected.
Receipts
Calculate the monthly payment for a home mortgage of $439,000 with a fixed APR of 4.0% for 30 years
$2095.85
Find the savings plan balance after 17 months with an APR of 3% and monthly payments of $370
$4483.35
Denise is in the 35% tax bracket and claims the standard deduction. How much will her tax bill be reduced if she makes a $3788 contribution to charity?
$0
In a recent year, the total receipts for the US federal government were estimated to be $2288 billion. The total outlays were estimated to be $2613 billion. The table below shows the makeup of federal government outlays in that year- the percentage of total outlays spent in each category.
$1 trillion
How much profit per share did company ABC earn in the past year?
$1.21
Kelly earned wages of $99,224, received $5115 in interest from a savings account, and contributed $ 6434 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had deductions totaling $8845. Find her gross income.
$104,339
You invest $6000 in an account that pays simple interest of 3% for 6 years.
$1080.00
The credit card APR is 18% and you want to pay off the balance in 3 years
$115.69; $4164.76
$11,000 is invested at an APR of 2.2% for 4 years.
$12,000.42
Find the savings plan balance after 25 months with an APR of 3% and monthly payments of $476
$12,263.94
$1200 deposit at an APR of 2% with quarterly compounding for 2 years
$1248.85
Principal: $950 Rate: 3% Years: 6
$13.35
Stephen earned $62,292 from wages as an accountant and made $2987 in interest. Find how much he paid in FICA and income taxes. Assume he is single and takes the standard deduction.
$14,514
Suppose you start saving today for a $20,000 down payment that you plan to make on a house in 10 years. Assume that you make no deposits into the account after your initial deposit. The account has quarterly compounding and an APR of 3%. How much would you need to deposit now to reach your $20,000 goal in 10 years?
$14,832.96
In a recent year, the total receipts for the US federal government were $2154 billion. The total outlays were $2472 billion. The deficit was $318 billion. What would the deficit have been, if there had been a 2% increase in total receipts?
$141,244.00
Sarah takes courses on a quarter system. Three times a year, she takes 15 credits at a tuition rate of $260 per credit; her fees are $190 per quarter and her room in a shared house costs $130 per week. Round your answer to the nearest dollar.
$1586
Ken is head of household with a dependent child and a taxable income of $91,691. He also is entitled to a $1000 tax credit. Calculate the amount of tax owed.
$16,425
You invest $800 in an account that pays simple interest of 4% for 5 year(s).
$160.00
The credit card APR is 19% and you want to pay off the balance in 2 years
$161.31; $3871.38
$1070 is invested at an APR of 3.5% for 13 years.
$1673.43
You put $422 per month in an investment plan that pays an APR of 3%. How much money will you have after 25 years? Compare this amount to the total amount of deposits made over the time period
$188,215.30; this is $61,615.30 more than the total amount of the deposits
Kevin is married, but he and his wife filed separately. His gross salary was $37,967, and he earned $448 in interest. He had $1141 in itemized deductions and claimed three exemptions for himself and two children. Find his taxable income
$20,615
Matt is single and earned wages of $32,338. He received $421 in interest from a savings account. He contributed $588 to a tax-deferred retirement plan. He had $579 in itemized deductions from charitable contributions. Calculate his taxable income.
$22,17
You invest $11,000 in an account that pays simple interest of 2% for 1 year.
$220
You need a loan of $120,000 to buy a home. You have a choice between a 30-year fixed rate loan at 3% and an ARM with a first-year rate of 2%. Suppose that the ARM rate rises to 5.5% at the start of the third year. Neglecting compounding and changes in principal, estimate how much extra you will be paying per month during the third year of the ARM over what you would have paid if you had taken the fixed rate loan
$250
Ashton maintains an average balance of $1300 on his credit card which carries an annual interest rate of 24%.
$26
In a recent year, the total receipts for the US federal government were $2154 billion. The total outlays were $2472 billion. The deficit was $318 billion. What would the deficit have been, if there had been a 0.5% decrease in total outlays?
$275 billion
Income Expenses Part time job:$900/month Rent: 580/month Student Loan $7000/year Groceries$70/week Scholarship:$5000/year Tuition/fee35002xa yr Entertain:$170/month
$287
You want to have a $40,000 college fund in 6 years. How much will you have to deposit now in an account with an APR of 5% and annual compounding?
$29,848.62
The credit card APR is 19% and you want to pay off the balance in 1 year.
$294.90; $3538.81
You want to have a $75,000 college fund in 15 years. How much will you have to deposit now in an account with an APR of 6% and monthly compounding?
$30,561.18
In a recent year, the total receipts for the US federal government were estimated to be $2288 billion. The total outlays were estimated to be $2613 billion. The table below shows the makeup of federal government receipts that year - the percentage of total receipts coming from each category.
$306 billion
Mark earned $40,208 from wages as a mechanic and made $1539 in interest. Calculate his FICA tax.
$3075.91
$2500 deposit at an APR of 4% with monthly compounding for 6 years
$3176.85
Derek bought a new car for $34,000. He made a down payment of $18,000 and financed the balance through the car dealer. He was unable to make the first monthly payments. Until he makes a payment he is paying 2% interest per month on the balance.
$320
Caitlin is single and earned wages of $32,988. She received $300 in interest from a savings account. She contributed $479 to a tax-deferred retirement plan. She had $530 in itemized deductions from charitable contributions. Calculate her gross income
$33,28
Jeff earned wages of $47,058, received $1794 in interest from a savings account, and contributed $ 3901 to a tax deferred retirement plan. He was entitled to a personal exemption of $3900 and had deductions totaling $7425. Find his taxable income.
$33,626
Kyle is single and earned wages of $34,036. He received $362 in interest from a savings account. He contributed $549 to a tax-deferred retirement plan. He had $405 in itemized deductions from charitable contributions. Calculate his adjusted gross income
$33,849
Jeff earned wages of $48,267, received $1837 in interest from a savings account, and contributed $ 3210 to a tax deferred retirement plan. He was entitled to a personal exemption of $3900 and had deductions totaling $7314. Find his taxable income
$35,680
Calculate the annual interest for a $1000 Treasury bond with a current yield of 3.7% that is quoted at 106 points
$39.22
Calculate the annual interest for a $1000 Treasury bond with a current yield of 3.4% that is quoted at 116.4 points
$39.58
Find the savings plan balance after 3 months with an APR of 4% and monthly payments of $155
$396.57
Suppose that you want to have a $160,085 retirement fund after 42 years. How much will you need to deposit now if you can obtain an APR of 3%, compounded daily? Assume that no additional deposits are to be made to the account.
$45,408.79
You have a choice between a 30-year fixed rate loan at 5% and an ARM with a first-year rate of 2%. The ARM rate rises to 6.5% at the start of the third year. Neglecting compounding and changes in principal, estimate your monthly savings with the ARM during the first year on a $180,000 loan.
$450
Suppose you start saving today for a $5000 down payment that you plan to make on a condo in 2 years. Assume that you make no deposits into the account after your initial deposit. The account has annual compounding and an APR of 5%. How much would you need to deposit now to reach your $5000 goal in 2 years?
$4535.15
Suppose you have a student loan of $100,000 with an APR of 7% for 25 years. If you decide you would like to pay off the loan in 10 years instead of 25, how much more will you have to pay each month?
$454.30
Bill earned wages of $47,227, received $1837 in interest from a savings account, and contributed $ 3010 to a tax deferred retirement plan. He was entitled to a personal exemption of $3900 and had deductions totaling $7719. Find his adjusted gross income
$46,05
Tim is in the 35% marginal tax bracket and claims the standard deduction. How much will his tax bill be reduced if he qualifies for a $470 tax credit?
$470
How much was spent on non-defense discretionary outlays that year?
$470 billion
You intend to create a college fund for your baby. If you can get an APR of 4.0% and want the fund to have a value of $128,366 after 17 years, how much should you deposit monthly?
$484.4
Carla earned wages of $47,607, received $1736 in interest from a savings account, and contributed $ 3921 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had deductions totaling $7663. Find her gross income
$49,343
Calculate the monthly payment for a student loan of $42,434 at a fixed APR of 7% for 10 years
$492.69
Bill earned wages of $52,676, received $1878 in interest from a savings account, and contributed $ 2508 to a tax deferred retirement plan. He was entitled to a personal exemption of $3900 and had deductions totaling $7444. Find his adjusted gross income
$52,04
Carla earned wages of $53,687, received $1731 in interest from a savings account, and contributed $ 2999 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had deductions totaling $7180. Find her gross income.
$55,418
Stephen sets up an IRA with an APR of 5% at age 26. At the end of each month, he deposits $56 in the account. How much will the IRA contain when he reaches 65? Compare that amount to the total amount of deposits made over the time period.
$57,471.98; this is $35,071.98 more than the total amount of the deposits
Calculate the monthly payment for a home mortgage of $117,000 with a fixed APR of 4.3% for 30 years
$579.00
Jim is in the 15% tax bracket and itemizes his deductions. How much will his tax bill be reduced if he makes a $4097 contribution to charity?
$614.55
Keiko pays $320 per month for food, a semiannual health insurance premium of $1500, and an annual car insurance premium of $600. Round your answer to the nearest dollar.
$620
Principal: $4021 Rate: 3% Years: 18
$653.14
$5150 deposit at an APR of 4% with semiannual compounding for 6 years
$6531.45
A $5000 deposit in an account with an APR of 4.8% compounded continuously for 6 years
$6668.79
A $49,433 deposit in an account with an APR of 3.6% compounded continuously for 10 years.
$70,853.77
Find the savings plan balance after 4 years with an APR of 2% and monthly payments of $593
$7314.99
Suppose you had invested $7000 in this fund 5 years ago. How much would your investment be worth now?
$8063.8
Mike and Carrie are in the 28% marginal tax bracket and claim the standard deduction. How much will their tax bill be reduced if they qualify for a $830 tax credit?
$830
Jenny earned wages of $99,016, received $5325 in interest from a savings account, and contributed $ 5935 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had deductions totaling $8971. Find her taxable income
$85,535
Jim earned wages of $89,118, received $5002 in interest from a savings account, and contributed $ 6342 to a tax deferred retirement plan. He was entitled to a personal exemption of $3900 and had deductions totaling $8797. Find his adjusted gross income.
$87,778
Kelly earned wages of $87,240, received $4814 in interest from a savings account, and contributed $ 6070 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had deductions totaling $9049. Find her gross income
$92,05
Budget Summary for the Wonderful Widget Company (all amounts in thousands of dollars)
$936,175.00
The credit card APR is 18% and you want to pay off the balance in 4 years
$94.00; $4512.0
Calculate the monthly payment for a student loan of $135,240 at a fixed APR of 5.7% for 20 years.
$945.64
A $7478 deposit in an account with an APR of 6.5% compounded continuously for 4 years.
$9698.44
Linda enrolls for 10 credit-hours for each of two semesters at a cost of $550 per credit-hour (tuition and fees). In addition, textbooks cost $350 per semester. Round your answer to the nearest dollar.
$975
You invest $33,200 in an account that pays simple interest of 3% for 1 year(s).
$996.00
Income Expenses Salary:$ 32,000/yr I House pay:$1700/month Jewel sales:$350/month I Groceries:$120/week . I Household expense:$360/mon . I Car Insure:$480 semiannually . I Donations:$500/year . I Misc:$800/month
-$445
4^-3
1/64
t - 7 = 11
18
A bank offers an APR of 2.2% compounded daily.
2.22%
A bank offers an APR of 2.4% compounded monthly.
2.43%
Wendy buys a $1 lottery ticket every day and takes 3 yoga classes per week which cost $16 each.
23%
Andy earned $74,358 from wages as an engineer. Determine his overall tax rate on his gross income, including both FICA and income taxes. Assume he is single and takes the standard deduction.
23.8%
Calculate the current yield for a $1000 Treasury bond with a coupon rate of 2.5% that has a market value of $750
3.00%
A bank offers an APR of 3.25% compounded semiannually.
3.28%
A bank offers an APR of 3.25% compounded quarterly.
3.29%
Julio goes to a concert once every two weeks at an average ticket price $70; he spends $600 per year on car insurance.
303%
You just put $4399 in a CD that is expected to earn 8% compounded quarterly, and $6876 in a savings account that is expected to earn 3% compounded semiannually. Determine when, to the nearest year, the values of your two investments will be the same.
4 years
Consider an account with an APR of 4%. Find the APY with quarterly compounding, monthly compounding, and daily compounding.
4.06%, 4.07%, 4.08%
You currently drive 240 miles per week in a car that gets 16 miles per gallon of gas. A new fuel-efficient car costs $13,000 (after trade-in on your current car) and gets 40 miles per gallon. Insurance premiums for the new and old car are $800 and $600 per year, respectively. You anticipate spending $1400 per year on repairs for the old car and having no repairs on the new car. Assuming that gas remains at $3.50 per gallon, estimate the number of years after which the costs of owning the new and old cars are equal.
4.6 years
Elena spends $4 per day on a coffee at the neighborhood cafe and $300 per month on food.
41%
9r + 3 = 48
5
Calculate the current yield for a $100 Treasury bond with a coupon rate of 5% that has a market value of $85
5.88%
36^1/2
6
George spends $18 per week at the movies and $550 per month on rent. Wendy buys a $1 lottery ticket every day and takes 3 yoga classes per week which cost $16 each.
6%
8x = 56
7
x + 10 = 17
7
2^3
8
512^(1/3)
8
Suppose you invest $8000 in this fund today. How many shares will you buy? Round to three decimal places
804.829 shares
Abbey earned $70,218 in wages. Kathryn earned $70,218, all in dividends and long-term capital gains. Calculate the total tax owed by each, including both FICA and income taxes. Assume they are both single and take the standard deduction. Note that long-term capital gains and dividends are taxed at 0% for income in the 10% and 15% tax brackets and at 15% for income in all higher tax brackets
Abbey: $16,355 Kathryn: $3595
You must decide whether to buy a new car for $28,000 or lease the same car over a three-year period. Under the terms of the lease, you make a down payment of $2000 and have monthly payments of $350. At the end of three years, the leased car has a residual value (the amount you pay if you choose to buy the car at the end of the lease period) of $15,000. Assume you sell the new car at the end of three years at the same residual value. Compare the cost of leasing and buying the car.
Buy $13,000, lease $14,600
Choice 1: 30-year fixed rate at 4% with closing costs of $1323 and no points Choice 2: 20-year fixed rate at 3.5% with closing costs of $1323 and 2 points
Choice 1: $477.42; $1323 Choice 2: $579.96; $3323
Choice 1: 30-year fixed rate at 4.25% with closing costs of $1137 and 1 points Choice 2: 20-year fixed rate at 3.75% with closing costs of $1137 and 3 points
Choice 1: $491.94; $2137 Choice 2: $592.89; $4137
Choice 1: 30-year fixed rate at 4.5% with closing costs of $1308 and no points Choice 2: 20-year fixed rate at 4% with closing costs of $1308 and 4 points
Choice 1: $506.69; $1308 Choice 2: $605.98; $5308
A ______ represents money that is borrowed (or taken from savings) during a single year.
Deficit
Suppose your after-tax income is $36,357. Your annual expenses are $28,740 for rent, $6489 for food and household expenses, $1283 for interest on credit cards, and $6668 for entertainment, travel, and other. Do you have a surplus or deficit?
Deficit
Suppose you are 25 years old and would like to retire at age 65. Furthermore, you would like to have a retirement fund from which you can draw an income of $192,644 per year-forever! How can you do it? Assume a constant APR of 4%.
Deposit $4074.67 per month.
True or False? A mortgage lender will typically require a down payment of 40% to 50% of the purchase price.
False
You have a choice between going to an in-state college where you would pay $6000 per year for tuition and an out-of-state college where the tuition is $12,000 per year. The cost of living is higher at the in-state college, where you can expect to pay $1000 per month in rent, compared to $600 per month at the other college. You will pay $2000 per year to travel back and forth from the out-of-state college. Assuming all other factors are equal, which is the less expensive choice on an annual basis? Find the cost of each college for one year.
In-state $18,000, out-of-state $21,200
Kelsey earned $65,208 in wages. Conner earned $65,208, all in dividends and long-term capital gains. Calculate the overall tax rate for each, including both FICA and income taxes. Assume they are both single and take the standard deduction. Note that long-term capital gains and dividends are taxed at 0% for income in the 10% and 15% tax brackets and at 15% for income in all higher tax brackets.
Kelsey: 22.6% Conner: 4.4%
Kerry invests $362 in a savings account that earns 5.4% compounded annually. Andy invests $362 in a savings account that earns 7% compounded annually. How much is in each of their accounts after 10 years and after 20 years?
Kerry: $612.51; $1036.38 Andy: $712.11; $1400.83
________ outlays are expenses that will be paid automatically unless Congress acts to change them.
Mandatory
Your deductible expenditures $4146 for contributions to charity and $635 for state income taxes. Your filing status entitles you to a standard deduction of $6100. Should you itemize your deductions rather than claiming the standard deduction? If so, what is the difference?
No, you are better off with the standard deduction.
You need a $159,118 loan. Compute the monthly payment for each of the loan options listed below. Assume that the loans are fixed rate. Option 1: a 30 year-loan at an APR of 7.25% Option 2: a 15-year loan at 6.8%
Option 1: $1085.47 Option 2: $1412.4
You need a $87,168 loan. Compute the monthly payment for each of the loan options listed below. Assume that the loans are fixed rate.
Option 1: $639.61 Option 2: $808.0
You need a $95,921 loan. Compute the monthly payment for each of the loan options listed below. Assume that the loans are fixed rate
Option 1: $703.83 Option 2: $862.17
You need a $140,204 loan. Compute the monthly payment for each of the loan options listed below. Assume that the loans are fixed rate. Option 1: a 30 year-loan at an APR of 7.15% Option 2: a 15-year loan at 6.75%
Option 1: $946.95 Option 2: $1240.68
You are single and have a taxable income of $56,767. You make monthly contributions of $455 to a tax-deferred savings plan. Calculate the effect on annual take-home pay of the tax-deferred contribution
Take-home pay will be $1365 more per year with tax-deferred plan
You are married filing jointly and have a taxable income of $287,874. You make monthly contributions of $1095 to a tax-deferred savings plan. Calculate the effect on annual take-home pay of the tax-deferred contribution.
Take-home pay will be $4336 more per year with tax-deferred plan
Five years after paying $15,487 for shares in a new company, you sell the shares for $7342
Total Return: -52.59% Annual Return: -13.87%
Four years after buying 800 shares of XYZ stock for $40 per share, you sell the stock for $3000
Total Return: -90.62% Annual Return: -44.67%
Seven years after paying $5708 for shares in a new company, you sell the shares for $11,475.
Total Return: 101.03% Annual Return: 10.49%
Five years after buying 200 shares of XYZ stock for $30 per share, you sell the stock for $10,000
Total Return: 66.67% Annual Return: 10.76%
True or False? An origination fee is one example of a closing cost when taking out a mortgage loan.
True
True or False? If net income is positive, the budget has a surplus
True
True or False? The publicly held debt represents money the government must repay to individuals and institutions that bought Treasury issues.
True
Many insurance companies carry a deductible provision that states how much of a claim you must pay out of pocket before the insurance company pays the remaining expenses. Suppose you have a car insurance policy with a $500 deductible provision (per claim) for collisions. During a two-year period, you file claims for $400 and $950. The annual premium for the policy is $650. Determine how much you would pay with and without the insurance policy.
With policy $2200, without policy $1350
Assume that you have a health insurance plan with the following provisions: · Office visits require a copayment of $35 · Emergency room visits have a $450 deductible (you pay the first $450) · Surgical operations have a $2500 deductible (you pay the first $2500) · You pay a monthly premium of $400 During one-year period, your family has the following expenses. Expenses Total cost(before insure) Feb 18: Emergency room $740 Mar 13: Office visit $100 Apr 14: Surgery $8200 May 12: Office visit $120 Nov 23: Emergency room $1120
With policy $8270,without policy $10,280
Suppose your after-tax income is $40,040. Your annual expenses are $25,017 for rent, $6199 for food and household expenses, $1253 for interest on credit cards, and $7374 for entertainment, travel, and other. You expect to get a 25% raise next year. Could you afford $4782 in tuition and fees without going into debt?
Yes
Your deductible expenditures are $8236 for interest on a home mortgage, $3528 for contributions to charity, and $634 for state income taxes. Your filing status entitles you to a standard deduction of $12,200. Should you itemize your deductions rather than claiming the standard deduction? If so, what is the difference?
Yes, $198
Suppose your after-tax income is $37,050. Your annual expenses are $32,426 for rent, $6572 for food and household expenses, $1265 for interest on credit cards, and $7396 for entertainment, travel, and other. You expect to get a 25% raise next year. Will this affect the outcome?
Yes, a raise would create a surplus.
A couple under the age of 30 has a combined household income of $3700 per month and spends $ 180 per month on donations.
above average
A single 27-year old woman with a monthly salary of $2700 spends $220 on health care.
above average
A single 31-year old man with a monthly salary of $3100 spends $560 on food.
above average
A plan in which payments are made at the beginning of each period is called a(n) ________.
annuity due
All of your income for the year including wages, tips, profits from a business, interest or dividends from investments is called your _____ income.
gross
A single 48-year old man with a monthly salary of $4800 spends $1200 on rent.
below average
________ is interest paid both on the original principal and on all interest that has been added to the
compound interest
Based on the fact that stocks historically trade at an average P/E ratio of about 12-14, does the stock price of company ABC seem cheap, about right, or expensive right now?
expensive
A savings plan in which payments are made at the end of each month is called a(n)_____?
ordinary annuity
p1/3 = 9
p = 729
The lump sum deposit that would give you the same end result as regular payments into a savings plan is called the _____ of the savings plan.
present value
How does the share price for company XYZ compare to the profit per share that it earned in the past year?
price = 13 × earnings
How does the share price for company ABC compare to the profit per share that it earned in the past year?
price = 24 × earnings
For any loan, the ______ is the amount of money owed at any particular time.
principal
The ________ in financial formulas is the balance upon which interest is paid.
principal
________ is interest paid only on the original principal, and not on any interest added at later dates.
simple interest
A(n) ________ deduction is the addition of all individual deductions to which you are entitled.
standard
You currently drive 360 miles per week in a car that gets 20 miles per gallon of gas. You are considering buying a new fuel-efficient car for $12,000 (after trade-in on your current car) that gets 60 miles per gallon. Insurance premiums for the new and old car are $900 and $600 per year, respectively. You anticipate spending $1400 per year on repairs for the old car and having no repairs on the new car. Assume gas costs $3.50 per gallon. Over a five-year period, is it less expensive to keep your old car or buy the new car? By how much?
the new car is $4420 less expensive
The relative change in the investment value is the ______.
total return
True or False? A progressive income tax means that people with a higher income pay at a higher tax rate
true
True or False? If you buy an item (such as property or stock) at one price and later sell it at a higher price, the profit is called a capital gain.
true
v 3 = 27
v = 3
(x - 2) 3 = 8
x = 4
x 2 = 81
x = ±9