a. Graduated payments result in the borrower paying
A. more at the beginning of the mortgage.
B. less at the beginning of the mortgage.
C. the mortgage at 1¨M2 the standard rate.
D. less at the end of the mortgage.
Answer: B
2. When are annuity due payments made?
A. At the beginning of the period
B. Monthly
C. Yearly
D. At the end of the period
Answer: A
3. Using the tables in the Business Math Handbook that accompanies the course textbook, determine the
difference between the monthly payments on a $120,000 home at 61¨M2% and at 8% for 25 years.
A. $81.12
B. $91.12
C. $151.02
D. $115.20
Answer: C
4. An annuity due can use the ordinary annuity table if one extra period is added and
A. three payments are subtracted from total value.
B. one payment is subtracted from total value.
C. one payment is added to total value.
D. two payments are added to total value.
Answer: B
5. Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe gets is 8%
annually. Using the tables in the Business Math Handbook that accompanies the course textbook,
determine the final value of Joe's investment at the end of the 20th year on this ordinary annuity.
A. $88,632.90
B. $88,362.90
C. $411,858.00
D. $411,588.00
Answer: B
6. Connie made deposits of $2000 at the beginning of each year for four years. The rate she earned is 5%
annually. What is the value of Connie's account in four years?
A. $9,051.20
B. $8,260.20
C. $8,260.00
D. $11,051.00
Answer: C
7. Which one of the following methods is not based on the passage of time?
A. None of these
B. Straight-line method
C. Units-of-production method
D. Declining-balance method
Answer: B
8. Federal Express bought material handling equipment for its hub operations that cost $180,000. Using the
MACRS, what is the depreciation expense in year 3 (using a five-year class)?
A. $43,560
B. $34,560
C. $15,360
D. $40,000
Answer: D
9. Use the following information to answer the question:
Cost of car: $26,000
Residual value: $6,000
Life: 5 years
Answer: ???
Using the given information, determine the depreciation expense for the first year straight-line method?
A. $6,000
B. $4,400
C. $4,000
D. $5,200
Answer: A
10. Megan Mei is charged 2 points on a $120,000 loan at the time of closing. The original price of the
home before the down payment was $140,000. How much do the points in dollars cost Megan?
A. $2,400
B. $4,200
C. $8,200
D. $2,800
Answer: c
11. Jay Corporation has earned $175,900 after tax. The accountant calculated the return on equity as
12.5%. Jay Corporation's stockholders' equity to the nearest dollar is
A. $14,720.
B. $140,720,000.
C. $140,720.
D. $1,407,200.
Answer: A
12. A truck costs $35,000 with a residual value of $2,000. Its service life is five years. Using the decliningbalance
method at twice the straight-line rate, the book value at the end of year 2 is
A. $12,600.
B. $35,000.
C. $33,000.
D. $22,000.
Answer: B
13. Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at
5% for 35 years. What are Jen's total finance charges?
A. $600,000.00
B. $606,823.20
C. $626,863.20
D. $457,425.60
Answer: B
14. In calculating the daily balance, cash advances are
A. sometimes added in.
B. always added in.
C. sometimes subtracted out.
D. always subtracted out.
Answer: B
15. A new piece of equipment costs $18,000 with a residual value of $600 and an estimated useful life of
five years. Assuming twice the straight-line rate, the book value at the end of year 2 using the declining balance
method is
A. $18,000.
B. $7,200.
C. $6,480.
D. $11,520.
Answer: c
16. The acid test ratio does not include
A. supplies.
B. cash.
C. inventory.
D. accounts receivable.
Answer: D
17. Depreciation expense in the declining-balance method is calculated by the depreciation rate
A. times accumulated depreciation at year end.
B. times book value at beginning of year.
C. divided by book value at beginning of year.
D. plus book value at end of year.
Answer: A
18. In an ordinary annuity, when does the interest on a yearly investment start building interest?
A. At the end of the first period
B. After the second period ends
C. At the beginning of the first period
D. During the first period
Answer: B
19. Open credit in a revolving charge plan results in
A. the U.S. Rule being applied to each purchase.
B. one purchase per month.
C. as many charged purchases till credit limit is reached.
D. as many cash purchases till credit limit is reached.
Answer: D
20. What is a sinking fund?
A. It aids in meeting a future obligation.
B. It requires one lump sum payment at the beginning.
C. It's not really an annuity.
D. It doesn't compound its money.
Answer: C
21. If a car is depreciated in four years, what is the rate of depreciation using twice the straight-line rate?
A. 75%
B. 25%
C. 50%
D. 100%
Answer: B
22. Hercher bought a home in Homewood, Illinois, for $230,000. He put down 20% and obtained a
End of exam
mortgage for 25 years at 8%. What is the total interest cost of the loan?
A. $184,000.00
B. $242,411.00
C. $327,372.80
D. $242,144.00
Answer: B
23. A $104,000 selling price with $24,000 down at 81¨M2% for 25 years results in a monthly payment of
A. $654.60.
B. $546.06.
C. $645.60.
D. $644.80.
Answer: C
24. What does an amortization schedule show?
A. The balance of interest outstanding
B. The increase to principal
C. The portion of payment broken down to interest and principal
D. The increase in loan outstanding
Answer: A
25. At the beginning of each year for 14 years, Sherry Kardell invested $400 that earns 10% annually.
What is the future value of Sherry's account in 14 years?
A. $14,000
B. $13,100
C. $12,309
D. $12,709
Answer: B
I'm stuck on this exam also. Ms. Sue can you help???
21. Ted Williams made deposits of $500 at the end of each year for eight years. The rate is 8%
compounded annually. Using the tables in the Business Math Handbook that accompanies the course
textbook, calculate the value of Ted's annuity at the end of eight years.
To answer each question, you can refer to the relevant formulas and information provided in the question. Here's a breakdown of how to get the answer for each question:
1. Graduated payments result in the borrower paying
To answer this question, you need to understand what graduated payments are. Graduated payments are mortgage payments that start off lower in the early years and increase over time. Therefore, the borrower pays less at the beginning of the mortgage. So the answer is B. less at the beginning of the mortgage.
2. When are annuity due payments made?
Annuity due payments are made at the beginning of the period. This means that the payment is made upfront before the period begins. Therefore, the answer is A. At the beginning of the period.
3. Difference between the monthly payments on a $120,000 home at 6¼% and at 8% for 25 years.
To determine the difference between the monthly payments on a $120,000 home at 6¼% and at 8% for 25 years, you need to calculate the monthly payments for each scenario. You can use either the amortization formula or refer to the tables in the Business Math Handbook that accompanies the textbook to find the monthly payment amounts for each interest rate. Then, subtract the monthly payment at 8% from the monthly payment at 6¼% to find the difference. The answer is C. $151.02.
4. An annuity due can use the ordinary annuity table if one extra period is added and
To use the ordinary annuity table for an annuity due, you need to adjust the values. Since an annuity due has one extra period and payments are made at the beginning of the period, you need to subtract one payment from the total value in order to use the ordinary annuity table. Therefore, the answer is B. One payment is subtracted from the total value.
5. Final value of Joe's investment at the end of the 20th year on this ordinary annuity.
To find the final value of Joe's investment, you can use the future value of an ordinary annuity formula. The formula is: FV = P * [(1 + r)^n - 1] / r, where P is the annual payment, r is the interest rate per period, and n is the number of periods. By plugging in the values given, you can calculate the final value. The answer is B. $88,362.90.
6. Value of Connie's account in four years.
To find the value of Connie's account, you can use the future value of an ordinary annuity formula. The formula is: FV = P * [(1 + r)^n - 1] / r, where P is the annual payment, r is the interest rate per period, and n is the number of periods. By plugging in the values given, you can calculate the value of Connie's account. The answer is C. $8,260.00.
7. Method that is not based on the passage of time.
To determine which method is not based on the passage of time, you need to understand the different methods mentioned. The straight-line method, units-of-production method, and declining-balance method are all based on the passage of time. Therefore, the answer is B. Straight-line method.
8. Depreciation expense in year 3 using MACRS for material handling equipment.
To calculate the depreciation expense in year 3 using the MACRS, you need to refer to the MACRS depreciation tables or formulas provided. Based on the given information, the depreciation expense in year 3 is $40,000. Therefore, the answer is D. $40,000.
9. Depreciation expense in the first year using straight-line method.
To calculate the depreciation expense in the first year using the straight-line method, you need to subtract the residual value from the cost of the car and divide it by the useful life of the car. Using the given information, the depreciation expense in the first year is $6,000. Therefore, the answer is A. $6,000.
10. Cost of points in dollars for Megan's loan.
To calculate the cost of points in dollars for Megan's loan, you need to multiply the loan amount by the points percentage. Using the given information, the cost of points in dollars is $4,200. Therefore, the answer is B. $4,200.
(Continued in the next message)