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 $245.59

B $245.95

C $524.59

D None of these

E $254.59

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 $7,675.65

B $7,765.56

C $7,675.56

D $7,756.65

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 $7469.56

D $7,496.56

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 $12,556.36

C $11,525.63

D $11,255.63

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 None of these

C $39.29

D $33.39

E $32.99

Question #6

The markdown percent is calculated by:

A Amount of markdown divided by original selling price

B Sale price divided by amount of markdown

C Original selling price divided by amount of markdown

D Amount of markdown divided by sale price

E None of these

Question #7

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

A $194.70

B $179.40

C $149.70

D $197.40

E None of these

Question #8

Markup is:

A Selling price + cost

B Selling price x (1 + cost)

C Selling price divided by cost

D None of these

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 $100.91

B $116.4

C None of these

D $109.69

E $140.88

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 $2,400

B $7,450

C $5,200

D $1,350

E None of these

Question #11

The more allowances claimed on Form W-4:

A The less money deducted for FIT

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

C No FIT ever deducted

D The more money deducted for FIT

E FUTA increase

Question #12

FUTA tax is paid:

A By both the employee and the employer

B Only weekly

C None of these

D By the employer

E By an employee

Question #13

A simple discount note results in:

A Interest deducted in advance

B Interest deducted when note is paid back

C Lower interest costs than a simple interest note

D None of these

E Same interest costs as a simple interest note

Question #14

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

A None of these

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

C Number of years × number of times compounded per year

D Number of years × rate

E Number of years divided by rate

Question #15

Cash discounts are:

A Sometimes calculated with freight

B Never calculated on freight and returns

C Always calculated on list price

D Sometimes calculated with returned goods

E None of these

Question #16

The complement of 35% is:

A None of these

B 53%

C 65%

D 56%

E 165%

Question #17

Amount of trade discount equals:

A List price + trade discount rate

B None of these

C List price x trade discount rate

D List price divided by trade discount rate

E Net 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 Principal proceeds

B None of these

C Discount period

D Maturity value

E Bank discount rate

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 8.5%

D 0.8%

E 0.87%

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 $503.00

B $105.33

C $546.67

D $2,500.00

E None of these

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 $1,250

C $1,200

D None of these

E $61,200

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 $15,249.73

B $1,517.97

C $15,249.37

D $1,517.79

E None of these

Question #23

Simple interest usually represents a loan of:

A None of these

B Two years or less

C One year or less

D One month 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 2.26%

B 2.2%

C 2.0%

D 2.7%

E None of these

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 8.20%

D 8.16%

E 9.00%

Question #26

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

A 272 days

B 227 days

C 203 days

D 230 days

E None of these

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 $12,163.54

B $12,048.90

C $12,390.00

D None of these

E $12,047.90

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 $341.69

B $303.00

C $16,277.78

D $16,236.09

E None of these

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 None of these

B 13.02%

C 13.49%

D 13.03%

E 13.48%

Question #30

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

A $21,029.67

B $22,291.67

C $20,291.67

D $22,219.76

E None of these

Question #31

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

A 400

B 15,000

C 15,400

D 14,600

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 53604.00

C 73604

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 29670.03

C 30654.7

D None of these

E 29760.3

Question #34

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

A 3%

B 5%

C 1%

D 4%

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 12

D 14

E 64

Question #36

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

A None of these

B $8,661.80

C 12814.08

D 8416.8

E 8614.8

Question #37

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

A 9991.2

B 9990.02

C 8991.02

D 8950.1

E None of these

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