1. What is the future value of an ordinary annuity of $12,000 per
year, for three years, at 9% interest compounded annually?
A. $39,337.20 C. $36,000.00
B. $39,240.00 D. $14,442.75
Annual deposit: A = $12000
Annual interest rate: r = 9% = 0.09
Number of periods: t = 3
Future value: F = A * {[(1 + r)^t - 1] / r}
F = 12000 * {[(1 + 0.09)^3 - 1] / 0.09} = 39337.20
The future value of the ordinary annuity is $39337.20
2. Nick has a revolving department store credit card account with
an annual percentage rate of 15%. Last month’s balance on the
account was $423.78. During the current month, he made purchases
totaling $123.42 and made a payment of $100. The store
uses the unpaid balance method. According to this information,
what must be the amount of the finance charge? Round your
answer to the nearest cent.
A. $5.30 C. $6.36
B. $5.59 D. $6.71
Monthly interest rate: (15%) / 12 = 0.0125
Unpaid balance = $423.78
Finance charge = $423.78 * 0.0125 = approximately $5.30
3. Using the information provided in Question 2, what is Nick’s current account balance?
A. $380.12 C. $452.50
B. $441.61 D. $453.56
4. On a balance sheet, the accounts of notes payable, salaries payable, and taxes payable
would fall under the category of
A. current liabilities. C. current assets.
B. investments and other assets. D. long-term liabilities.
5. A company purchased an air conditioning system for $10,200. The shipping charges on
the system were $875, and the setup costs were $1,250. The system is expected to last
for five years and has a residual value of $2,000. If you use the straight-line method to
calculate the depreciation for this air conditioning system, what would be the annual
depreciation?
A. $2,000 C. $2,065
B. $2,040 D. $2,465
6. Which of the following are the four elements that are included in the total amount of a
mortgage payment?
A. The principal, the interest, the tax, and the insurance
B. The principal, the rate, the time, and the interest
C. The title, the closing costs, the closing statement, and the deed
D. The ARM, the PMI, the VA, and the FHA
7. Imagine that you’re the manager of an auto parts store. Figure A-2 contains your recordsof annual inventory figures for windshield wipers. Using the FIFO method of inventory pricing,what is the dollar value of ending inventory if there were 300 units on hand onDecember 31? Round your answer to the nearest dollar.
A. $3,188 C. $3,350
B. $3,219 D. $3,600
Art’s Auto Parts—Annual Inventory of Windshield Wipers
January 1 Beginning Inventory300 units @ $11.00
March 15 Purchase 150 units @ $10.50
June 10 Purchase 200 units @ $10.75
September 22 Purchase 175 units @ $10.00
December 10 Purchase 100 units @ $12.00
FIGURE A-2—Use this illustration to
answer Questions 7 and 8.
8. Using the information shown in Figure A-2, suppose that the ending inventory on
December 31 was 500 units. What would be the dollar value of the ending inventory usingthe LIFO method of inventory pricing? Round your answer to the nearest dollar.
A. $5,450 C. $5,363
B. $5,413 D. $5,225
9. Which of the following is known as the accounting equation?
A. assets = liability + owner’s equity
B. profit = revenue – total expenses
C. return on investment = net income
owner’s equity
D. gross profit margin = gross profit
net sales
10. What would be the monthly payment on a $90,000 mortgage at a rate of 7.5% interest for30 years?
A. $136.80 C. $630.00
B. $562.50 D. $636.30
11. Wallace and Sarah have decided to purchase furniture for their new home. They have twopayment options. The first option is to pay a cash payment of $4,200. The second option isto finance the furniture with a two-year installment loan. The loan requires a 12% downpayment and 24 equal monthly payments of $195. According to this information, whatwould be the finance charge on the loan?
A. $3,696 C. $504
B. $984 D. $175
12% down = $504.00
24 payments @ $195.00 = 4680.00
Total paid if you go this way = $5184.00
that's $984.00 extra
12. Using the information in Question 11, what is the total deferred payment price of the furniture?
A. $4,200 C. $5,184
B. $4,680 D. $5,664
13. The Patel family recently purchased a home, taking out a mortgage of $235,000 at 8 3/4%for 25 years. The annual property taxes on the home are $6,345, and the annual hazardinsurance premium is $1,479. What is the monthly PITI payment of their loan?
A. $2,729.40 C. $1,849.45
B. $2,586.05 D. $652.00
14. How much money must be deposited now, at 6% interest compounded semiannually, toyield an annuity payment of $4,000 at the beginning of each six-month period, for a total offive years? Round your answer to the nearest cent.
A. $38,120.80 C. $31,144.40
B. $35,144.44 D. $29,440.36
= $35,144.44
Examination, Lesson 2 57
58 Examination, Lesson 2
15. When you’re preparing an income statement, to calculate gross margin, you must subtract
A. sales discounts and sales returns and allowances from gross sales.
B. cost of goods sold from net sales.
C. income tax from income before taxes.
D. total operating expenses from net sales.
16. Figure A-3 lists financial information for the month of September for a large clothing store.
Figure A: Financual Highlights for Sept 1-Sept 30
------...
Beg Inventory - Cost: $575,000 Retail: $718,750
Net Purchases - Cost: $60,000 Retail: $75,000
Net Sales - Retail : $650,000
Using the retail method of inventory, estimate the value of the ending inventory at cost on
September 30.
A. $12,283 C. $140,432
B. $115,000 D. $143,750
Beginning inventory - $575,000 (retail value is marked up 25% or 575,000 *1.25= $718,750, to figure that I started by dividing $718,750/575,000 = 1.25)
Purchases - $60,000 at cost
Sales (assumed at same markup) - $520,000 (650,000 / 1.25)
Net inventory at month end:
$575,000 (beginning inventory)
+ $60,000 (purchases)
- $520,000 (cost of goods sold)
= $115,000 ending inventory
17. The method used to calculate depreciation for federal income tax purposes is the
A. sum-of-the-years’ digits method.
B. declining-balance method.
C. units-of-production method.
D. modified accelerated cost recovery system method.
18. What sinking fund payment would be required at the end of each three-month period, at8% interest compounded quarterly, in order to amount to $20,000 within five years?
A. $1,223.13 C. $823.13
B. $1,156.51 D. $437.04
$20,000 =
$20,000 = 24.297C
C = $20,000 / 24.2974
= $823.134
19. Brenda bought a swimming pool by obtaining an 8% add-on interest installment loan fromthe bank. The pool cost $2,400, and the bank required a 15% down payment and equalmonthly payments for two years. How much is Brenda’s monthly payment?
A. $85.00 C. $98.60
B. $86.36 D. $116.00
Assuming the 8% is a one off penalty, then
Total $2400.00 less $360.00 deposit = $2040.00
Plus 8% flat interest on $2040.00 of $163.20 = $2203.20
$2203.20 / 24 = $91.80 per month.
If the 8% is an annual rate then the monthly payment would be approx $98.60
Brandy’s Boutique
Financial Highlights for September 1–September 30
Cost Retail
Beginning Inventory $575,000 $718,750
Net Purchases (September) $60,000 $75,000
Net Sales (September) $650,000
FIGURE A-3—Use this
illustration to answer
Question 16.
20. Shawn bought a home with an adjustable-rate mortgage. The margin on the loan is 2.7%,and the rate cap is 7.2% over the life of the loan. If the current index rate is 4.3%, what isthe initial interest rate of the ARM?
A. 7% C. 11.5%
B. 9.9% D. 14.2%
21. Which of the following is the bottom line on the income statement?
A. The gross margin C. The total operating expenses
B. The net sales D. The net income (or loss)
22. A party supplies store recorded net sales of $423,400 for the year. The store’s beginninginventory at retail was $105,850 and its ending inventory at retail was $127,020. Whatwould be the inventory turnover at retail, rounded to the nearest tenth?
A. 1.8 C. 3.6
B. 3.3 D. 4.0
23. Ramon owns a home that was appraised for $132,600. The balance remaining on his
existing mortgage is $43,260. Ramon’s credit union is willing to loan an amount up to 70%of the appraised value of a home. Based on this information, what is the maximum potentialamount of credit that’s available to Ramon for a home equity loan?
A. $92,820 C. $62,538
B. $89,340 D. $49,560
= $132,600 × 0.7 = $92,820
Potential amount of credit = $92,820 - $43,260 = $49,560
24. What amortization payments would be required every six months, at 14% interest, to payoff a $35,000 loan within four years? Round your answer to the nearest cent.
A. $7,544.96 C. $5,120.60
B. $5,861.37 D. $3,051.62
Please see the attached excel sheet
25. Cassandra is repaying an installment loan of $3,500 with 20 equal monthly payments of$196 each. What is the annual percentage rate of the loan?
A. 7.55% C. 12%
B. 11.16% D. 13.25%
Please see the attached excel file
26. The LaGuardia family’s total living expenses are $63,000 a year. After the death of theinsured, the total family income would be $55,000. How much life insurance is required tocover the dependents’ income shortfall, if the prevailing interest rate is 4%?
A. $137,500 C. $200,000
B. $157,500 D. $295,000
$63,000 - $55,000 = $8,000
= $200,000
Examination, Lesson 2 59
27. Last month, Bob took a cruise from Florida to the Bahamas. The cost of his round-tripticket was $832. The federal excise tax on the cruise was 8%, and Florida has a sales taxrate of 6%. What was the total purchase price of Bob’s ticket?
A. $832.00 C. $898.56
B. $881.92 D. $948.48
Excise Tax = $832 × 0.08 = $66.56
Sales Tax = $832 × 0.06 = $49.92
Total Purchase Price = $832 + $66.56 + $49.92 = $948.48
28. Look at the line chart shown in Figure A-4. This line chart illustrates the monthly sales for acompany that sells music CDs. According to the chart, how many CDs were sold in themonth of May?
A. 500 C. 1,500
B. 1,000 D. 2,000
Please provide the chart
29. A company declared a dividend of $2,200,000. The company has 55,000 shares of
common stock outstanding. What are the dividends per share of common stock?
A. $0.40 per share C. $40 per share
B. $4 per share D. $400 per share
$2,200,000 / 55,000 = $40
30. A mutual fund has total assets of $57,000,000 and liabilities of $8,550,000. If 15,960,000shares are outstanding, what is the net asset value of the fund?
A. $1.30 per share C. $3.28 per share
B. $3.04 per share D. $4.80 per share
60 Examination, Lesson 2
FIGURE A-4—Use this
illustration to answer
Question 28.
31. Look at the bar graph shown in Figure A-5. This graph illustrates the amount of heating oilthat was consumed over the winter months in the Henderson household. According to thegraph, during which month did the Hendersons use the largest amount of heating oil?
A. January C. November
B. February D. December
Please provide graph
32. According to the bar graph shown in Figure A-5, what was the smallest amount of heatingoil the Hendersons used during any one month?
A. 10.0 gallons C. 11.0 gallons
B. 10.5 gallons D. 11.5 gallons
Please provide graph
33. Sam bought a stereo for a total of $676.24, including state sales tax. The state sales taxrate is 7%. What was the total amount of sales tax on the stereo?
A. $632.00 C. $47.34
B. $85.59 D. $44.24
Sales Price = $676.24 / 1.07 = $632
Sales Tax = $676.24 - $632 = $44.24
34. The Shawnee Company paid a dividend of $0.42 per share last year. If the current sellingprice of the stock is $27.38, what is the current yield on the stock?
A. 0.7% C. 1.7%
B. 1.5% D. 6.5%
Current Yield = $0.42 / $27.38 = 0.01534 = 1.5%
Examination, Lesson 2 61
FIGURE A-5—Use this
illustration to answer
Questions 31 and 32.
35. The pie chart shown in Figure A-6 illustrates the favorite foods of a selected group of fiveyear-old children. A total of 5,280 children were polled in order to construct this chart.According to the information provided in the chart, how many children chose pizza as their
favorite food?
A. 211 C. 1,584
B. 739 D. 2,112
Please provide chart
36. When discussing stocks, the term proceeds refers to
A. the fee the stockbroker charges to assist with the sale or purchase of stocks.
B. the amount an investor is earning on a stock as compared with other investments.
C. stocks that don’t have a par value.
D. the amount of money an investor receives after selling a stock.
37. A street vendor recorded the following hot dog sales for the week: 100 on Monday, 87 onTuesday, 95 on Wednesday, 125 on Thursday, 210 on Friday, 250 on Saturday, and 57 onSunday. What is the mean sales per day?
A. 210 C. 132
B. 185 D. 57
Mean Sales = = 132
62 Examination, Lesson 2
FIGURE A-6—Use this
illustration to answer
Question 35.
38. What is the purchase price of fifteen Columbia Corporation bonds with a coupon rate of73/4 and a current market price of 98? The commission charge is $8 per bond. The date ofthe transaction is March 1, and the bond pays interest on November 1 and May 1.
A. $15,207.45 C. $12,811.33
B. $13,206.50 D. $1,013.83
Not 100% sure about this one, I will keep checking & answer it together with the missing questions
39. A property insurance policy has an annual premium of $780. What is the regular refund ifthe policy is canceled by the insurance company after five months?
A. $455.00 C. $156.00
B. $325.00 D. $111.43
40. What is the total amount of tax due on a property with an assessed value of $315,200?
The property tax rate is 53.7 mills.
A. $169,262.40C. $5,869.65
B. $16,926.24 D. $315.00
41. Determine the median of the following numbers: 25, 28, 22, 27, 25, 20, 30, 23, 27, and 29.
A. 25 C. 27
B. 26 D. 28
42. Leona purchased 1,200 shares of the Lakeview Mutual Fund at an offer price of $4.20 pershare. She later sold the shares at a net asset value of $4.95 per share. During the time
Leona owned the shares, Lakeview paid a dividend of $0.42 per share. What is her return
on investment?
A. 27.9% C. 10.7%
B. 17.9% D. 3.6%
43. Which of the following is a type of vehicle insurance that covers damage sustained by theinsured’s vehicle in an accident?
A. Collision C. Comprehensive
B. Liability D. Deductible
44. Martha Stevens has a tax liability of $6,420 and owes additional taxes amounting to $235.She is entitled to one tax credit of $374 and another credit of $563. If her employer withholds
$260 every two weeks from her pay, Martha will
A. receive a refund of $340.
B. receive a refund of $1,042.
C. owe taxes amounting to $340.
D. owe taxes amounting to $1,042.
Examination, Lesson 2 63
45. Find the range of the following set of numbers: 247, 562, 498, 149, 568, 327, and 470.
A. 498 C. 419
B. 470 D. 403
46. A life insurance policy that pays whether the policyholder lives or dies is called
A. premium insurance. C. term insurance.
B. face value insurance. D. permanent insurance.
47. A frequency distribution is obtained by
A. listing the values in sets of data individually.
B. taking the difference between the highest and the lowest value in each set of data.
C. summing the values of a set of data and dividing by the number of values in the set.
D. dividing a set of data into equal-size classes.
48. When a bond is selling for more than its par value, it is selling at a
A. coupon rate. C. discount.
B. premium. D. debenture.
49. Find the mode of the following list of prices: $1.67, $1.29, $0.79, $1.29, $0.89, $0.89,
$0.79, $1.67, $0.79, $0.57, and $0.79.
A. $0.57 C. $0.89
B. $0.79 D. $1.67
50. If you buy eight bottles of soda that cost $1.29 each and the sales tax rate is 6%, what willbe the total amount of your purchase? Round your answer to the nearest cent.
A. $9.71 C. $10.94
B. $10.32 D. $16.32