Financial Math Final Exam

Maria has a $5,000$5,000 investment with an annual compound interest rate of 15.6%.15.6%. After how many years will the initial investment have doubled in value? Enter your answer as a whole number, such as: 6

5

Bill receives a monthly stipend of $800.$800. He also works at a bookstore making $8$8 an hour. He wants a monthly income of $1,200.$1,200. How many hours does he need to work each month?

50

Maria works in real estate and earns a monthly salary of $1,200. In August, she wrote contracts for a home sale at $269,000 and long-term leases at $1450,$1100, and $950 per month. What was her income from the commissions and her total income in August?

Commission on home sale $8,742.50 Total income for August $10,117.50 Commission on leases $175.00

Nancy wants to receive the most return on a $50,000 investment. She has two options. Option 1 gives annual interest at 5% compounded yearly. Option 2 gives annual interest at 3.5%compounded monthly. Which option is better after 3 years, and what is the difference in earned interest?

Option 1 earns more interest by $2,354.21

Henry earns $5,000$5,000 per month and has decided to invest 30%30% of his monthly income into a mutual fund. The mutual fund charges a brokerage fee of 12%12% of the amount invested. What are the amounts that Henry pays, invests, and earns? Match each statement with the correct amount.

The amount of brokerage fees Henry pays per year: $2160 The amount of income Henry uses for everything else: $42000 Henry's brokerage fees if his income triples: $6480 Henry's brokerage fees if his income doubles: $4320 The amount of money Henry invests after fees per year: $15840

Review the table with fees for Bank A and Federal Credit Union (FCU) B.

Three overdrafts per month cost more at FCU B. FCU B offers a better option for using checks. An ending balance of $250 at Bank A costs $5.00. An ending balance of $2000 at Bank A earns $2.00

Pamela is a college student. She pays tuition every semester and rent every month, and she uses cash daily for food. The expression 2x+12y+365z2�+12�+365� represents her yearly expenses. Which variable represents her rent?

y

Ursula has a bank account balance of $60.$60. Her bank charges a fee of $34$34 for each overdraft. She makes a purchase of $25.17$25.17 today, and purchases of $45.76$45.76 and $24.36$24.36 tomorrow. What is her account balance after the bank applies the overdraft fees? Responses

−$103.29

Kevin is trying to determine whether to lease or purchase a car. The purchase price is $42,000$42,000, and he has been approved for a 4-4-year loan with a 5.75%5.75% interest rate. He assumes the car's value will depreciate 8%8% each year, and he intends to sell the car after 1010 years at the depreciated value. What is his net gain or loss after selling the car?

−$28,870.77

Angela has a taxable income of $81,420.

$13771

Eric has a taxable income of $48,700.$48,700. He uses Table X to find the amount of Arizona state income tax he owes. What does Eric owe in state tax?

$1478

According to the table, what is the tax for a single person with $24,589 in taxable income?

$2,674

A company is valued at $100,000,000 and has 5,000,000 shares of stock. What is the value of each share?

$20

Veronica has a current checking account balance of $469$469. In the next month she deposits $120,$120, pays her annual online banking fee of $25,$25, and makes withdrawals of $200$200 and $160$160 from an ATM that charges a $2$2 fee per transaction. What is her account balance at the end on the month? Enter your answer as a dollar amount, such as: $425

$200

Jennifer made an initial investment of $14,000$14,000 in a mutual fund. She invests an additional $300$300 each month to the mutual fund. What are the possible totals of her investment in the mutual fund? Select all that apply.

$21,800 $26,600 $20,600

John takes a small business loan for $18,000.$18,000. The term for repayment is 6060 months and the annual interest rate is 5.25%.5.25%. Using the monthly payment formula, what is the estimated monthly payment? monthly payment=P⋅r(1+r)n(1+r)n−1monthly payment=�⋅�(1+�)�(1+�)�−1 Enter your answer as dollars and cents, such as: $425.36

$341.75

Alice has an income of $52,000.$52,000. She has an $8,300$8,300 exemption for her dependents. Her deductions are $2,560$2,560 for medical expenses and, as a teacher, $250$250 for educational supplies. What is her net taxable income?

$40,890

A landscaping company charges a flat rate of $50,$50, plus $15$15 per acre. John wants a price quote on the cost of yard work for his plot of land. Which expressions represent the cost of servicing x� acres of John's land?

$50+$15x try $50−$15x NOT $75x NOT $15x

Levi would like to use a credit card to make a $3000$3000 purchase. He is considering two credit options. The first requires a down payment of $1000$1000 followed by monthly payments of $125$125. The second requires a down payment of $1300$1300 followed by monthly payments of $110$110. The two options accumulate the same amount of interest and require the same number of monthly payments. What is the amount of interest for this loan?

$500

Wayne is an entrepreneur who owns 33 small businesses. He earns $500$500 per week from his laundromat business, $2,200$2,200 per month from his cleaning business, and $45,000$45,000 per year from his car detailing business. Which expressions model Wayne's income? Select all that apply.

$500(a+90c)+$2,200b $500a+$2,200b+$45,000c

Ian has the option of purchasing or renting a home. The purchase option requires a loan of $100,000$100,000 for a 20-20-year term at a 4.9%4.9% interest rate. The rental option requires a monthly rental payment of $725.$725. Using the loan amortization formula, how much money does Ian save per month if he purchases the home instead of renting it?

$70.56

Marcus is single and earns $3,475$3,475 each month as the manager of a cell phone store. He lives in Colorado, which has a flat tax rate of 4.63%.4.63%. He uses the federal income tax brackets in the table to determine the amount he should have withheld each month for taxes. What is his total tax withholdings each month according to the table?

$925.39

Richard paid $10,455$10,455 in federal income tax. In which tax bracket was his taxable income?

22%

John works 40 hours a week as a carpenter. He spends 60% of this time building decks and 40% installing siding. John is paid a different hourly wage for each type of labor. Let x represent the hourly wage for building decks and y represent the hourly wage for installing siding. Which expression represents John's weekly income? Responses

24x+16y

Maddie has a gross monthly income of $2200. She has 35% of her paycheck withheld as deductions. She pays $400 for rent. What percent of her net monthly pay goes to rent? Enter your answer as a number, rounded to the nearest percent, such as: 42

28

Alexander is a waiter. He gets paid $3.25$3.25 per hour plus tips based on his performance. Which expression represents Alexander's salary?

3.25x+y

Samuel withdraws $5,000$5,000 each month from his bank account to finance his new business. His account had an initial balance of $325,000.$325,000. After how many months will his balance be $175,000$175,000 if he makes no deposits to the account? Enter your answer as a whole number of months, like this: 42

30

Darren has been approved for a 30-30-year mortgage with a 5.5%5.5% interest rate. He found a house with a purchase price of $125,000$125,000 and plans to make a $20,000$20,000 down payment. Darren currently pays $900$900 per month in rent for his apartment. He plans to save the difference each month between the monthly mortgage payment and the rent. After how many months will Darren recover his down payment through his monthly savings? Do not include interest on his savings.

66

Jose started a small business and wants to determine when the business will become profitable. His operating costs can be expressed as y=$10,000+$3,000x,�=$10,000+$3,000�, where x� is the number of months he stays in business. His sales revenues can be expressed as y=$4,500x,�=$4,500�, where x� is the number of months he stays in business. How many months will it take for his business to become profitable? Enter your answer as a whole number of months, such as: 3 months

7 months

Sarah considers whether to make an additional down payment on her home. She obtained a $100,000$100,000 loan with a 30-30-year term at 3.5%3.5% interest. Using the loan amortization formula, how much does she save on her monthly loan payments if she decreases her loan amount by $20,000?$20,000?

89.80

The Bennetts spend $10,000.00 on a home improvement project. They make the purchase with a credit card that has a 9% APR. They decide to make $150.00 monthly payments. How many months will it take to pay off the credit card balance? Enter your answer as a whole number, such as: 40

93

Jose wants to start a restaurant and is writing a business proposal. His rent is $1,000 per month. The monthly operating costs are equal to the wages paid to the employees, w, plus the business overhead, k. Jose wants his monthly sales revenue, x, to be 44 times greater than the operating costs. Which expressions show the cost of running the business over the given time period? Match the statements with the function that best represents its cost.

His yearly profits: NOT 12x+$12000-12w-12k His monthly costs of operations: $1000+w+k His yearly costs of operations: $12000+12w+12k His monthly profits: x-($1000+w+k) His semiannual costs of operations: 6($1000+w+k)

Nick can invest $10,000$10,000 in either one of two annuities. Annuity A has a 6%6% annual interest rate and requires a starting principal of $9,000,$9,000, plus annual $100$100 deposits for the next 1010 years. Annuity B has a 12%12% annual interest rate and requires a starting principal of $9,000,$9,000, plus annual $200$200 deposits for the next 55 years. What is the difference between the final balances of the two annuities?

NOT 1200

Benjamin considers purchasing a car for $35,000.$35,000. He has been approved for a 6-6-year loan for $30,000$30,000 with an interest rate of 5.25%.5.25%. He also has the option to lease the car for $600$600 per month for 66 years with a $2,500$2,500 down payment. Using the loan amortization formula, how much money does Benjamin save over the 66 years if he purchases the car? Do not consider the future value of the car in your answer.

NOT 1250

Buford pays for a $4000.00$4000.00 vacation with a credit card that has a 20%20% APR. He decides to make $200.00$200.00 monthly payments. What is the total amount of interest and fees based on the APR? Enter your answer as a dollar amount, such as: $324

NOT 1600

Julie wants to invest $3,000$3,000 into a mutual fund that pays 7%7% interest for 1010 years. Suppose the interest were compounded monthly instead of annually. How much would the future value of the investment increase?

NOT 6028.98

Jasmine is taking out a small business loan for her floral shop. She plans to apply for a $30,000$30,000 loan with a 5-5-year term and a 3.75%3.75% interest rate. She is unsure of her expected monthly profits, so she wants to know the benefit of a smaller loan. Using the loan amortization formula, how much money would Jasmine save over the life of the loan if she were to borrow $10,000$10,000 less?

NOT 851

Megan is 4545 years old and would like to retire by the age of 65.65. Her portfolio manager gives her two investment options. Option 1 is a retirement fund that expects to earn 8%8% interest compounded annually. Megan would need to make a $5,000$5,000 initial deposit plus additional $500$500 deposits each month into the fund. Option 2 is a retirement fund that expects to earn 7.5%7.5% interest compounded annually. Megan would need to make a $10,000$10,000 initial deposit plus additional $500$500 deposits each month. Which retirement fund will produce a larger balance upon her retirement?

Option 2 has the larger balance of $311,121.57

Two investments have identical future values of $10,000$10,000 with 10-10-year maturities. Option A has a 9%9% interest rate compounded annually. Option B has a 9%9% simple annual interest rate. Which statements are accurate about the present values of these investments? Select all that apply. Responses

Option A has a present value of $4,224.11. Option B has a present value of $5,263.16. Option A earns more interest than Option B.

Sarah is in the process of purchasing a car. She is trying to determine which car insurance policy is the best option for her situation. She is a 35-35-year-old, single female who has never received a traffic ticket or been in a car accident. Which policy is the best option if she wants to get the maximum coverage on her car?

Policy A is the best option

Jasmine is considering purchasing a $500,000$500,000 life insurance policy. Jasmine is a 51-51-year-old married mother of three children. She was recently diagnosed with osteoarthritis. Which statements about Jasmine's options are accurate? Select all that apply

Policy C is the best option because it is the cheapest whole life policy. Whole life insurance is the best option because of Jasmine's age.

Tim is considering purchasing a $500,000$500,000 life insurance policy. Tim is a 26-26-year-old single male with perfect health and no children. Which statements about Tim's options are accurate? Select all that apply.

Term life insurance is the best option because of Tim's age Policy B is the best option because the term is convertible

Thomas wants a $50,000$50,000 small business loan to start his landscaping business. Bank A offers him a 10-10-year loan at 3.9%3.9% interest. Bank B offers him a 5-5-year loan at 8.1%8.1% interest. Which statements are accurate about these options? Select all that apply

The total interest paid for the 10-year loan is $10,462. Thomas pays more over the life of the loan if he takes the 5-year loan. Thomas pays less over the life of the loan if he takes the 10-year loan. The monthly payments for the 5-year loan are $1,016.20.

Shawn is trying to determine if there are savings to purchasing a car in addition to owning it after all the payments have been made. With a $3000$3000 down payment, he needs a loan for $25,000.$25,000. He has been approved for this amount with a 5-5-year loan at an interest rate of 4.75%.4.75%. He also has the option of leasing the vehicle for $450$450 per month with the same down payment. Using the loan amortization formula, which statement is accurate?

The total interest paid over the life of the car loan is $3,135.

Xavier receives an inheritance of $15,000.$15,000. His bank offers two options for purchasing a certificate of deposit (CD). The first has an interest rate of 3.15%3.15% compound annually with a 5-5-year term and a 7.5%7.5% penalty if he withdraws his money before the term ends. The second has an interest rate of 1.95%1.95% compounded annually with a 4-4-year term. He considers both because he may need the money for college in 44 years. What is the total interest earned and final balance for each CD at the end of 44 years? Match each statement with the correct amount.

Value of CD 2 at end of 4-year term: NOT 16216.53 NOT $1,981.19 Interest earned at year 4 with CD 2 (1.95%): 1204.67 Value of CD 1 at year 4 after 7.5%penalty: 15707.60 Interest earned at year 4 with CD 1 (3.15%): NOT 1025.38 NOT 1,216.53

Which fees are associated with checking accounts and online banking? Select all that apply.

debit card fees ATM fees overdraft fees

Nancy wants to create a budget to improve her spending habits. She earns $3,000$3,000 per month and estimates her rent is twice as much as her food costs. The amount she spends on utilities and personal items is $100$100 less than her rent. She spends her remaining income on transportation. If r� is the cost of rent and t� is the cost of transportation, which function models her transportation costs?

t=$3,100−2.5r

Frank currently rents an apartment for $700$700 per month. He is considering purchasing a $125,000$125,000 condominium. He has been approved for a 30-30-year term mortgage with a 5.25%5.25% interest rate. Use technology to create a loan amortization model. What is Frank's monthly mortgage payment? What is the total interest he will pay on the loan? What is the total of all loan payments he will make? What is the difference between Frank's monthly loan payment and his monthly rent? Match the amount to the statement.

the difference between his monthly payment and his rent $9.75 the total interest paid on the loan $123,492 the monthly payment on the home $690.25 the total of all payments on the loan 248492