Final Exam

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Question #1

Seven years ago, Elise Damato started a business specializing in dog walking and dog grooming. After the first year, her pet food supplier started giving Elise a cash discount of 2.25% on any amount paid within 15 days of the invoice date. On October 25, Elise bought pet food costing $1,064. On November 8, Elise paid $800 on the purchase. Compute the unpaid balance. (This problem involves the partial payment of an invoice within the discount period.)

A $245.95

B None of these

C $254.59

D $524.59

E $245.59

Question #2

University Lending Corp. loans money to students at 10% compounded semiannually. Dwight Burch borrows $5,000 for 4 1/2 years. Compute the total amount, both principal and interest, that Dwight will be required to repay. (Use Tables 16-1A&B or a calculator.)

A $7,765.56

B $7,756.65

C $7,675.65

D $7,675.56

Question #3

Keifer Air Conditioning can borrow money for 2 years at 12% compounded quarterly. Compute the interest charge if Keifer borrows $28,000 to remodel his office. (Use Tables 16-1A&B or a calculator.)

A $7,694.56

B $7,964.65

C $7,496.56

D $7469.56

Question #4

Deborah Erickson deposited $8,875 in a credit union, which pays an interest of 8% compounded quarterly. Compute the amount that Deborah will have in her account after 3 years.

A $12,155.36

B $11,525.63

C $11,255.63

D $12,556.36

Question #5

At the end of the summer, Walgreens advertised blow-up pools for 66% off the regular price. Jeff Jones saw a pool with a regular price of $49.99. The dollar markdown is:

A $33.99

B $33.39

C $32.99

D $39.29

E None of these

Question #6

The markdown percent is calculated by:

A None of these

B Sale price divided by amount of markdown

C Amount of markdown divided by original selling price

D Amount of markdown divided by sale price

E Original selling price divided by amount of markdown

Question #7

An Apple iPod sells for $299, which is marked up 40% of the selling price. The cost of the iPod is:

A $179.40

B $194.70

C None of these

D $149.70

E $197.40

Question #8

Markup is:

A Selling price divided by cost

B None of these

C Selling price x (1 + cost)

D Selling price + cost

E Selling price – cost

Question #9

Ron Swift earned $1,500 last week. He is married, is paid biweekly, and claims two exemptions. Using the percentage method (use tables in the handbook), his income tax is:

A $116.4

B $100.91

C $140.88

D None of these

E $109.69

Question #10

Leo Corporation pays its employees on a graduated commission scale: 6% on the first $40,000 in sales, 7% on sales from $40,000 to $80,000, and 9% on sales greater than $80,000. Bernie Kaminsky had sales of $105,000. His commission is:

A None of these

B $1,350

C $7,450

D $5,200

E $2,400

Question #11

The more allowances claimed on Form W-4:

A The more money deducted for FIT, no FIT ever deducted, FUTA increase and the less money deducted for FIT

B The less money deducted for FIT

C The more money deducted for FIT

D FUTA increase

E No FIT ever deducted

Question #12

FUTA tax is paid:

A By an employee

B By both the employee and the employer

C By the employer

D Only weekly

E None of these

Question #13

A simple discount note results in:

A None of these

B Lower interest costs than a simple interest note

C Interest deducted in advance

D Same interest costs as a simple interest note

E Interest deducted when note is paid back

Question #14

In tables for calculating compound interest, the number of periods is equal to:

A Number of years × rate

B Number of years divided by number of times compounded per year

C Number of years divided by rate

D Number of years × number of times compounded per year

E None of these

Question #15

Cash discounts are:

A Never calculated on freight and returns

B Always calculated on list price

C Sometimes calculated with freight

D Sometimes calculated with returned goods

E None of these

Question #16

The complement of 35% is:

A 65%

B None of these

C 165%

D 56%

E 53%

Question #17

Amount of trade discount equals:

A Net price × trade discount rate

B List price x trade discount rate

C None of these

D List price divided by trade discount rate

E List price + trade discount rate

Question #18

In calculating the bank discount when discounting an interest-bearing note, which one of the following is not used in the calculation?

A Bank discount rate

B Discount period

C Principal proceeds

D Maturity value

E None of these

Question #19

Justin discounts a 115-day note for $26,000 at 8.5%. The effective rate of interest to the nearest tenth percent is:

A 8.7%

B None of these

C 0.8%

D 0.87%

E 8.5%

Question #20

A $40,000 loan at 4% dated June 10 is due to be paid on October 11. The amount of interest is (assume ordinary interest):

A $2,500.00

B $503.00

C $105.33

D None of these

E $546.67

Question #21

United Missouri Bank discounts a 120-day note for $60,000 at 6.75%. It uses 360 days in a year. What is the bank discount?

A $1,350

B $1,200

C $61,200

D None of these

E $1,250

Question #22

Ralph Corporation accepted a $15,000, 11%, 120-day note dated August 19 from Jay Company in settlement of a past bill. On October 20, Ralph Corporation decided to discount the note at a discount rate of 12%. The proceeds to Ralph Corporation is:

A $1,517.79

B $15,249.73

C $1,517.97

D $15,249.37

E None of these

Question #23

Simple interest usually represents a loan of:

A One year or less

B None of these

C One month or less

D Two years or less

E Six months or less

Question #24

Tiffany purchased a $10,000, 13-week Treasury bill that is paying 2.25%. What is the effective rate on this T-bill?

A None of these

B 2.0%

C 2.7%

D 2.26%

E 2.2%

Question #25

An 8% 13-week Treasury bill would have an effective interest rate of (to the nearest hundredth percent)? Assume it is a $10,000 Treasury bill.

A None of these

B 8.17%

C 8.16%

D 9.00%

E 8.20%

Question #26

A note dated August 18 and due on March 9 runs for exactly:

A None of these

B 272 days

C 227 days

D 230 days

E 203 days

Question #27

On March 12, Bill Jones accepted a $12,000 note in granting a time extension of a bill for goods purchased by Ron Prentice. Terms of the note were 13% for 90 days. On April 24, Bill could no longer wait for the money and discounted the note at Able Bank at a discount rate of 14%. The proceeds to Bill is:

A None of these

B $12,048.90

C $12,047.90

D $12,163.54

E $12,390.00

Question #28

Jill Corporation accepted a $16,000 note on Aug. 12. Terms of the note were 13% for 100 days. Jill discounted the note on September 28 at the Reno Bank at 14%. The proceeds to Jill would be:

A $303.00

B $16,277.78

C None of these

D $341.69

E $16,236.09

Question #29

Jay discounts a 100-day note for $25,000 at 13%. The effective rate of interest to the nearest hundredth percent is:

A 13.49%

B 13.48%

C None of these

D 13.03%

E 13.02%

Question #30

The maturity value of a $20,000, 7%, 75-day interest-bearing note dated September 10 is:

A $22,291.67

B None of these

C $21,029.67

D $20,291.67

E $22,219.76

Question #31

J. Ryan discounts an 80-day note for $15,000 at 12%. The bank discount is (assume ordinary interest):

A 14,600

B 15,400

C 15,000

D 400

E None of the above

Question #32

Merle Fonda opened a new savings account. She deposited $40,000 at 10% compounded semiannually. At the start of the fourth year, Merle deposits an additional $20,000 that is also compounded semiannually at 10%. At the end of six years, the balance in Merle’s account is (use the tables in the handbook):

A 80406.00

B 73604

C 53604.00

D 98636.72

E None of the above

Question #33

Sam Monte deposits $21,500 into Legal Bank, which pays 6% interest that is compounded semiannually. Using the table in the handbook, what will Sam have in his account at the end of six years?

A 30456.07

B None of these

C 29760.3

D 29670.03

E 30654.7

Question #34

$100,000 for 20 years compounded at 4% annually results in a rate per period of:

A 4%

B 3%

C 1%

D 5%

E None of the above

Question #35

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

A None of these

B 28

C 64

D 14

E 12

Question #36

Using the table in the handbook, the present value of $12,000 for six years compounded at 6% semiannually is:

A $8,661.80

B 8614.8

C 8416.8

D None of these

E 12814.08

Question #37

Using the table in your handbook, $6,000 for six years at 8½% compounded daily will grow to:

A 8991.02

B 8950.1

C 9990.02

D None of these

E 9991.2

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