Don't forget to use these links:
The McGraw-Hill website is a great utility for these tests and the final exam.
The answers are in Bold and underlined.
1. At the beginning of each
year, Bill Ross invests $1,400 semi-annually at 8 percent for 9 years. The cash
value of the annuity due at the end of the ninth year is: (Use the tables in
the handbook)
A. $38,739.68
B. $37,399.68
C. $37,939.86
D. $37,339.68
E. None of these
A. $38,739.68
B. $37,399.68
C. $37,939.86
D. $37,339.68
E. None of these
$1,400 x 27.6712 = $38,739.68 -
1,400.00 = $37,339.18
2. Joe Sullivan invests $9,000
at the end of each year for 20 years. The rate of interest Joe gets is 8
percent annually. The final value of Joe's investment at the end of the 20th
year on this ordinary annuity: (Use the tables in the handbook)
A. $411,588.00
B. $88,362.90
C. $411,858.00
D. $88,632.90
E. None of these
A. $411,588.00
B. $88,362.90
C. $411,858.00
D. $88,632.90
E. None of these
$9,000 x 45,7620 = $411,858
3. Al Miler, owner of Al's
Garage, estimates that he will need $29,000 for new equipment in 15 years. Al
decided that he would put aside the money now so that in 15 years the $29,000
will be available. His bank offers him 10 percent interest compounded
semiannually. (Use the tables in the handbook) Al must invest today:
A. $6,710.60
B. $6,942.60
C. $6,701.60
D. $125,335.10
E. None of these
A. $6,710.60
B. $6,942.60
C. $6,701.60
D. $125,335.10
E. None of these
$29,000 x .2314 = $6,710.60
5. The bank discount of a
$18,000 non-interest-bearing, simple discount 8 percent, 90-day note is:
A. $18,360
B. $17,640
C. $630
D. $360
E. None of these
A. $18,360
B. $17,640
C. $630
D. $360
E. None of these
$18,000 x .08 x 90/360 = $360
6. The effective rate of a
$30,000 non-interest-bearing simple discount 5 percent, 60-day note is:
A. 5 percent
B. 5.04 percent
C. 6.0 percent
D. 5.14 percent
E. None of these
A. 5 percent
B. 5.04 percent
C. 6.0 percent
D. 5.14 percent
E. None of these
$250/($29,750 x (60/360)) = 5.04%
7. By using the table in
handbook, the value of $60 deposited in a bank for six years at a rate of 10
percent compounded annually is:
A. $96.63
B. $96.36
C. $106.30
D. $106.03
E. None of these
A. $96.63
B. $96.36
C. $106.30
D. $106.03
E. None of these
60 x 1.7716 = $106.30
8. Anne Katz, owner of Katz
Sport Shop, loans $8,000 to Shelley Slater to help her open an art shop. Shelley
plans to repay Anne at the end of 8 years with interest compounded semiannually
at 8 percent. At the end of 8 years, Anne will receive: (Use the tables in the
handbook)
A. $14,984
B. $16,857
C. $16,587
D. $14,484
E. None of these
A. $14,984
B. $16,857
C. $16,587
D. $14,484
E. None of these
$8,000 x 1.8730 = $14,984
9. A note dated August 18 and
due on March 9 runs for exactly:
A. 230 days
B. 227 days
C. 272 days
D. 203 days
E. None of these
A. 230 days
B. 227 days
C. 272 days
D. 203 days
E. None of these
365 - 230 + 68 = 203
11. Lee Associates borrowed
$60,000. The company plans to set up a sinking fund that will pay back the loan
at the end of 12 years. Assuming a rate of 8 percent compounded semiannually, the
amount to be paid into the fund each period is: (Use the tables in the
handbook)
A. $1,350
B. $1,536
C. $1,653
D. $5,163
E. None of these
A. $1,350
B. $1,536
C. $1,653
D. $5,163
E. None of these
$60,000 x .0256 = $1,536
12. Dan Miller bought a new
Toyota truck for $28,000. Dan put a down payment of $6,000 and paid $390 monthly
for 70 months. The total finance charge:
A. $13,300
B. $5,300
C. $11,300
D. $27,300
E. None of these
A. $13,300
B. $5,300
C. $11,300
D. $27,300
E. None of these
$27,300 - 22,000 = $5,300
13. Justin Chan bought a Scion
car for a price of $8,200 putting down $800 and financing the remainder with 60
monthly payments at $179.99. The APR by table look-up is: (Use the tables in
the handbook)
A. Close to 15 percent
B. Close to 14 percent
C. Close to 13 ½ percent
D. Between 16.00 and 16.25 percent
E. None of these
A. Close to 15 percent
B. Close to 14 percent
C. Close to 13 ½ percent
D. Between 16.00 and 16.25 percent
E. None of these
60 x $179.99 = $10,799.40 -
7,400.00 = $3,399.40 $3,399.40/$7,400.00 = 45.93® close to 15%
14. Russell Ray bought a
plasma television with $200 down and 60 equal monthly installments of $210. The
total purchase price (cash price) of the televisions was $12,000. Russell
decided to pay off the bill after the 10th payment. Russell is
entitled to a rebate of: (Use the tables in the handbook)
A. $104.10
B. $208.10
C. $140.11
D. $280.22
E. None of these
A. $104.10
B. $208.10
C. $140.11
D. $280.22
E. None of these
15. Marsha Terban bought a
home for $119,000 with a down payment of $19,000. Her rate of interest is 12
1/2 percent for 35 years. The balance of mortgage at end of 1st
month is:
A. $3.33
B. $98,944
C. $99,669.76
D. $99,985.67
E. None of these
A. $3.33
B. $98,944
C. $99,669.76
D. $99,985.67
E. None of these
$100,000 - 14.33 = $99,985.67
16. Given selling price
$140,000; 20 percent down payment; 10 ½ percent for 25 years:
Calculate:
A. Amount of mortgage
B. Monthly payment
C. Interest portion of 1st payment
D. Principal portion of 1st payment
A. ________________
B. ________________
C. ________________
D. ________________
Calculate:
A. Amount of mortgage
B. Monthly payment
C. Interest portion of 1st payment
D. Principal portion of 1st payment
A. ________________
B. ________________
C. ________________
D. ________________
A. $112,000; B. $l,058.40; C. $980;
D. $78.40
Feedback: A. $140,000 x .80 = $112,000
B.112 x 9.45 = $1,058.40
C.$112,000 x .105 x 1/12 = $980
D. $1,058.40 - 980 = $78.40
Feedback: A. $140,000 x .80 = $112,000
B.112 x 9.45 = $1,058.40
C.$112,000 x .105 x 1/12 = $980
D. $1,058.40 - 980 = $78.40
17. From the following:
Calculate (a) Net Sales (b) Gross Profit (c) Total Operating Expenses (d) Net
Income Sales Returns $700; Rent expense $1,288; Sales Discounts $950;
Depreciation Expense $600; Cost of Merchandise Sold $7,600; Gross Sales
$20,900; Advertising Expense $1,650; Salary Expense $2,900; Heat Expense $900.
A. _______________
B. _______________
C. _______________
D. _______________
A. _______________
B. _______________
C. _______________
D. _______________
A. $19,250; B. $11,650; C. $7,338;
D. $4,312
Feedback: A. $19,250 ($20,900 - $700 -$950)
B. $11,650 ($19,250 - $7,600)
C. $7,338 ($1,288 + $600 + $1,650 = $2,900 + $900)
D. $4,312 ($11,650 - $7,338)
Feedback: A. $19,250 ($20,900 - $700 -$950)
B. $11,650 ($19,250 - $7,600)
C. $7,338 ($1,288 + $600 + $1,650 = $2,900 + $900)
D. $4,312 ($11,650 - $7,338)
18. Complete
A. _______________
B. _______________
C. _______________
D. _______________
E. _______________
A. _______________
B. _______________
C. _______________
D. _______________
E. _______________
A. $54,000; B. 22.22%; C. 16.67%;
D. 9.26%; E. 51.85%
Feedback: A. $54,000
B. 22.22% ($12,000/$54,000)
C. 16.67% ($9,000/$54,000)
D. 9.26% ($5,000/$54,000)
E. 51.85% ($28,000/$54,000)
Feedback: A. $54,000
B. 22.22% ($12,000/$54,000)
C. 16.67% ($9,000/$54,000)
D. 9.26% ($5,000/$54,000)
E. 51.85% ($28,000/$54,000)
19. Solve for (A) current
ratio (B) acid test (C) average day's collection (D) asset turnover (E) profit
margin on sales. (Round to nearest hundredth or hundredth percent, as needed.)
A. _______________
B. _______________
C. _______________
D. _______________
E. _______________
A. _______________
B. _______________
C. _______________
D. _______________
E. _______________
A. 1.58; B. 1.33; C. 28 days; D.
1.37; E. 15.38%
Feedback: A. $26,000/$16,500 = 1.58
B. ($26,000 -$4,100)/$16,500 = 1.33
C. $4,100/144.44 = 28 days
D. $52,000/38,000 = = 1.37
E. $8,000/$52,000 = 15.38%
Feedback: A. $26,000/$16,500 = 1.58
B. ($26,000 -$4,100)/$16,500 = 1.33
C. $4,100/144.44 = 28 days
D. $52,000/38,000 = = 1.37
E. $8,000/$52,000 = 15.38%
21. Abby Kaminsky, age 32, has
decided to take out a limited payment life policy. She chose this since she
expects her income to decline in future years. Abby has decided to take out a
twenty-year pay life policy with a coverage amount of $200,000. By using the
tables in the handbook, her annual premium will be:
A. $1,158
B. $2,316
C. $2,136
D. $1,518
E. None of these
A. $1,158
B. $2,316
C. $2,136
D. $1,518
E. None of these
200 x $11.58 = $2,316
22. Howard Hane had taken out
a $130,000 fire insurance policy for his new restaurant at a rate of $.82 per
$100. Nine months later, Howard canceled the policy and decided to move his
store to a new location. The cost of premium to Howard is: (Use the table in
the handbook)
A. $1,066
B. $863.46
C. $1,606
D. $836.64
E. None of these
A. $1,066
B. $863.46
C. $1,606
D. $836.64
E. None of these
1,066 x .81 = $863.46
23. Given the following
information, as well as using the tables in the handbook, the total annual
premium is:
Sam Montgomery - Territory 5
Classified Driver 17
Car Age 4 Symbol 5
State has compulsory insurance and the following options:
A. $791
B. $918
C. $971
D. $298
E. None of these
Sam Montgomery - Territory 5
Classified Driver 17
Car Age 4 Symbol 5
State has compulsory insurance and the following options:
A. $791
B. $918
C. $971
D. $298
E. None of these
$258 + $298 + $164 + $56 + $142 =
$918
24. Jim's Donut Shop reported
the following sales for the first 20 days:
1st complete a frequency distribution.
1st complete a frequency distribution.
Feedback: $100 = 7, 200 = 4, 300 = 3, 400 = 4, 500 = 2
25. Hector Rameriz received 3
A's and one B in his college courses. What is his grade point average? Assume
each course is 3 credits. A = 4, B = 3, C = 2, D = 1
A. 3.0
B. 3.25
C. 3.75
D. 3.80
E. None of these
A. 3.0
B. 3.25
C. 3.75
D. 3.80
E. None of these
45/12 = 3.75
26. Find the A) mean B) Median
C) Mode
18 25 16 29 38 18
18 25 16 29 38 18
A. 24, B. 21.5, C. 18
Feedback: A: (18 + 25 + 16 + 29 + 38 + 38)/6 = 24
B: 18 + 25/2 = 21.5
C: 18
Feedback: A: (18 + 25 + 16 + 29 + 38 + 38)/6 = 24
B: 18 + 25/2 = 21.5
C: 18
27. Today, a new Ford cost
$24,000. In 1970, the Ford cost $6,000. What is the price relative?
$400
Feedback: ($24,000/$6,000) x 100 = 400
Feedback: ($24,000/$6,000) x 100 = 400
28. Calculate the standard
deviation (to nearest hundredth) for the following sample set of data.
80, 92, 59, 46, 82, 74
80, 92, 59, 46, 82, 74
1st sort your data and find the data-mean
Feedback: 1,412.84/(6-1) = 282.57 = 16.81 Standard Deviation
Feedback: 1,412.84/(6-1) = 282.57 = 16.81 Standard Deviation
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