TEST BANK for Financial Algebra Advanced Algebra with Financial Applications 2nd Edition by Robert G by ACADEMIAMILL

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses 1. Your income before all taxes are deducted is your disposable income. a. True b. False ANSWER: False RATIONALE: Your income before all taxes are deducted is your gross income. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/23/2017 11:46 PM DATE MODIFIED: 2/8/2017 5:54 AM 2. A discretionary expense is one that can’t be eliminated from your day-to-day life. a. True b. False ANSWER: False RATIONALE: An essential expense is one that can’t be eliminated from your day-to-day life. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/23/2017 11:50 PM DATE MODIFIED: 2/7/2017 5:46 AM 3. When considering measures of central tendency, the presence of outliers would indicate that the mean may not be a good representation. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:13 AM DATE MODIFIED: 2/7/2017 5:46 AM 4. When a correlation coefficient is near 1, there is little or no correlation between corresponding variables. a. True b. False ANSWER: False RATIONALE: A correlation coefficient near 1 is a strong correlation; a value near 0 indicates little or no correlation. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:14 AM Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses DATE MODIFIED: 2/7/2017 5:46 AM 5. If a collection of data does not have any values that occur more than once, it is considered bimodal. a. True b. False ANSWER: False RATIONALE: A collection of data is considered bimodal if there are multiple values that have more occurrences than any of the other values. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:18 AM DATE MODIFIED: 2/7/2017 5:46 AM 6. The equation of the linear regression line of the scatterplot defined by these points: (1, 45), (2, 35), (3, 20), (4, 5) is y = –13.5x + 60. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:20 AM DATE MODIFIED: 2/7/2017 5:47 AM 7. A scatterplot is graphed with the time it takes a child to get dressed in the morning on the horizontal axis, and the child’s age in years on the vertical axis. The graph shows a negative correlation because the time decreases as the age of the child increases. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:51 AM DATE MODIFIED: 2/11/2017 4:08 AM 8. Rebecca will be entering college next fall and is trying to decide how much to spend on a laptop. After researching models online, she has found several that would meet her needs. Their costs are: $979; $1,349; $1,279; $1,349; $1,899; $2,049; $875; and $1,099. She determined the median to be $1,359. a. True b. False ANSWER: False RATIONALE: The median is the average of the two prices in the middle when placed in ascending order. Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses (1,279 + 1,349)/2 = $1,314. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:54 AM DATE MODIFIED: 2/22/2017 3:15 PM 9. A frequency distribution is a table that displays each possible value and the number of times that value occurs. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:55 AM DATE MODIFIED: 2/7/2017 5:50 AM

10. Sigma notation for determining median of 15 values is a. True b. False ANSWER: RATIONALE:

False

Sigma notation for determining the mean of 15 values is

POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/24/2017 12:57 AM DATE MODIFIED: 2/7/2017 5:54 AM 11. Marsha was shopping for a new dishwasher and researched the different models she could afford. Using Marsha’s frequency distribution table, determine the median price for dishwashers. Price,p($) Frequency,f 250 2 275 4 280 1 290 2 310 6 315 2 320 1 Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses 325 330 335 340 350 a. $317.50 c. $312.50 ANSWER: RATIONALE:

7 1 1 1 2 b. $325.00 d. $308.33 c

The 15th and 16th values are 310 and 315, and their average is $312.50. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 1:08 AM DATE MODIFIED: 2/11/2017 4:11 AM 12. Examine the frequency table below for prices to replace a dishwasher. What is the percentile rank of dishwashers that cost $325? Price,p($) Frequency,f 250 2 275 4 280 1 290 2 310 6 315 2 320 1 325 7 330 1 335 1 340 1 350 2 a. 83% b. 23% c. 60% d. 17% ANSWER: a RATIONALE: The percentage of dishwashers at or below $325 is 25 out of 30 or (25/30)*100 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 2:01 AM DATE MODIFIED: 2/11/2017 4:12 AM 13. McKenzie found the correlation coefficient on a set of data to be –0.20. Which term best describes the correlation? a. Strong positive b. Strong negative c. Weak positive d. Weak negative Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses ANSWER: d RATIONALE: A negative number indicates negative, and a number close to 0 indicates weak. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 5:45 AM DATE MODIFIED: 2/11/2017 4:28 AM 14. Which column in a frequency distribution table is an indicator of which percentile each of the possible values falls in? a. Frequency b. Relative cumulative frequency c. Cumulative frequency d. Relative frequency ANSWER: b RATIONALE: Relative cumulative frequency is a count of all possible values in a data collection at or below a certain value divided by the number of elements in the data collection. When multiplied by 100, this gives a percentile rank. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 5:50 AM DATE MODIFIED: 2/11/2017 4:29 AM 15. What is the most commonly used measure of dispersion? a. Range b. Mean deviation c. Standard deviation d. Variance ANSWER: c POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 5:54 AM DATE MODIFIED: 2/11/2017 4:30 AM 16. What is the standard deviation for the following frequency distribution? Price,p($) Frequency,f 250

275

280

290

310

315

320

325

330

Page 5

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses 335

340

350

a. $24.17 c. $19.67 ANSWER: RATIONALE:

b. $25.72 d. $661.67 b

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 5:56 AM DATE MODIFIED: 2/11/2017 4:32 AM 17. In the ordered pairs, the first coordinate is the price, p, and the second is the quantity, q: (250, 5,000), (100, 8,500), (450, 2,000), (300, 5,000), (200, 4,750). When the points are plotted in a scatterplot, what is the correlation coefficient? a. –0.93 b. –0.87 c. –0.83 d. –0.73 ANSWER: a RATIONALE: Use the statistics function to input the values and find r. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 6:25 AM DATE MODIFIED: 2/11/2017 4:32 AM 18. Which is the regression equation for a scatterplot with these points rounded to the nearest tenth: (4, 35), (6.5, 92), (2, 10), (5, 50), (6, 85), (10, 110)? a. y = –11.1x + 9,376.90 b. y = –13.4x + 8,432.27 c. y = 11.1x – 13.4 d. y = 13.4x – 11.1 ANSWER: d RATIONALE: Use the statistics function to input the values. Write the equation in the form y = mx + b. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 6:27 AM DATE MODIFIED: 2/11/2017 4:34 AM 19. The results of a recent survey showed that the average cost to rent a car for a week is $276. If the standard deviation Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses is $60, find the z-score for a weekly rental of $423.00? a. 7.05 b. 2.45 c. 4.6 d. -1.88 ANSWER: b RATIONALE: POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 6:29 AM DATE MODIFIED: 2/11/2017 4:35 AM 20. Maxine works at an amusement park. She recorded the number of ice cream cones sold each day, along with the high temperature in Fahrenheit degrees. Using her data, she wrote a linear regression equation of y = 9x – 487. If the temperature, or x, is 85°F, how many ice cream cones could Maxine expect to sell? a. 245 b. 278 c. 753 d. 765 ANSWER: b RATIONALE: 9(85) – 487 = 278 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/24/2017 6:36 AM DATE MODIFIED: 2/11/2017 4:35 AM 21. Mr. Joseph recently received a notice that his average gas and electric bill would increase at the beginning of the year. He went online to see the amount of his last 12 bills. If his average bill over the past 12 months goes up 17%, what can he expect to pay on average next year? 10/6/2016

$213.78

9/7/2016

$252.26

8/8/2016

$260.29

7/8/2016

$230.37

6/8/2016

$199.78

5/9/2016

$169.48

4/8/2016

$184.19

3/9/2016

$280.08

2/9/2016

$287.55

1/11/2016

$551.51

12/8/2015

$226.03

11/5/2015

$174.23

Page 7

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 6:45 AM DATE MODIFIED: 2/11/2017 4:36 AM 22. The Learners just got a notification about their past 4 months of gas and electric bills stating that the average for the winter months was $393.46. Mr. Learner remembered that it was cold in January, but was unable to find his bill for that month. Using what you know about measures of central tendency, help Mr. Learner calculate what his January gas and electric bill must have been. $327.69 3/9/2016 $336.43 2/9/2016 ??????? 1/11/2016 $264.46 12/8/2015 ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 6:53 AM DATE MODIFIED: 2/11/2017 4:37 AM 23. What kind of data does a scatterplot use? Bivariate data ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 7:03 AM DATE MODIFIED: 2/11/2017 4:38 AM 24. Does the graph below have a positive, a negative, or no correlation?

Page 8

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses

Positive ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 7:16 AM DATE MODIFIED: 2/11/2017 5:02 AM 25. Catalina’s mother recorded her height each year. The table below shows her height, in inches. Age Height (in.) 5 36 6 40 7 42 8 47 9 50 Find the equation of the regression line. y = 3.5x + 18.5 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 7:19 AM DATE MODIFIED: 2/11/2017 4:41 AM 26. The American Medical Association took the resting pulse rate of all the doctors at a local hospital and published this frequency distribution. What percentile is a resting pulse of 79 beats per minute? Resting Pulse 60-64

Frequency 2

Page 9

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses 65-69 70-74 75-79 80-84 85-89 90-94 95-99 ANSWER:

7 11 15 10 9 6 3 There are 63 doctors whose pulse was measured. Thirty-five of them had a pulse at or below 79. Therefore, the percentile for a heart rate of 79 is (35/63)*100 = 55.56%. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 7:20 AM DATE MODIFIED: 2/11/2017 4:41 AM 27. Victor found five cars online that he will go and see. The prices of the cars are: $5,000; $4,500; $5,500; $3,999; and $4,999. To save time, he only wants to see cars that are within one standard deviation of the mean. How many cars will he see? Three cars are between $4,289.46 and $5,309.74. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 7:25 AM DATE MODIFIED: 2/11/2017 4:42 AM 28. Pamela called nine repair shops for quotes for auto repairs. The prices are $139, $150, $345, $99, $167, $155, $140, $200, and $160. She thinks there is a chance that there is an outlier and the data may be skewed. Which measure of central tendency should she choose and what value would that be? The median is resistant to extreme numbers, so Pamela should put the numbers in ascending order ANSWER: and choose the one in the middle. 99, 139, 140, 150, 155, 160, 167, 200, 345. The auto repair quote in the middle is $155. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 7:33 AM Copyright Cengage Learning. Powered by Cognero.

Page 10

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses DATE MODIFIED: 2/11/2017 4:44 AM 29. Pamela called nine repair shops for quotes for auto repairs and pick the quote closest to the mean. The prices are $139, $150, $345, $99, $169, $155, $140, $200, and $160. She heard that data collections that are normally distributed will have 95% of its values within 2 standard deviations of the mean and wants to remove any quotes outside of that mark before determining a revised average that will help her make a decision. What is the mean price quote for 95% of the auto repairs that are within 2 standard deviations of the mean? Pamela should discount the $345 quote because it is not between $41.22 and $304.78 and determine ANSWER: the mean of the other eight values, which is $151.50. Pamela will take her car to the repair shop that quoted $150.00.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/24/2017 7:35 AM DATE MODIFIED: 2/11/2017 4:46 AM 30. Nancy works at a health club. She notices that the clients who run on the track for a longer period of time go a longer distance. If this is a causal relationship, explain the explanatory and response variables. The explanatory variable is the time on the track, and the response variable is the distance traveled. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 1:43 AM DATE MODIFIED: 2/11/2017 4:55 AM 31. The mean for Mr. Foster’s Financial Algebra test was 70, and the standard deviation was 4.2. Ms. Helmer’s mean for her test was 35, and the standard deviation was 5.7. Two friends were arguing about which did better on the test. Becky got a 78 on Mr. Foster’s test, whereas Erin got a 45 on Ms. Helmer’s test. Help settle the argument. Becky’s z-score was higher than Erin’s, meaning she scored higher than 97.13% of the students taking ANSWER: the same test as her, whereas Erin scored higher than 95.54% of the students taking the same test that she did. Copyright Cengage Learning. Powered by Cognero.

Page 11

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses

Page 12

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses

POINTS: 1 QUESTION TY Subjective Short Answer PE: HAS VARIABL False ES: DATE CREAT 1/25/2017 1:46 AM ED: DATE MODIFI 2/12/2017 11:47 PM ED: 32. Robert heard that there 78 different apartments in the part of New York City he is considering moving to. The mean rental price is $1,800 with a standard deviation of $200. He is assuming his data is normally distributed and wants to know how many apartments he will have to look at if his goal rental price is $1,500. Use the standard distribution table to help Robert narrow down his search to apartments priced under $1,500.

Page 13

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses

Page 14

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses 33. Calvin is graduating and wants to get a job in a government agency. He has done some research and will interview with two different agencies. The first agency offers starting salaries with a mean of $47,000 and a standard deviation of $1,500. The second agency’s average starting salary is also $47,000, with a standard deviation of $4,000. With which agency is Calvin more likely to start with an offer of $1,000 per week or more? At the first agency, a higher percentage of offers will be made below $52,000 than the second ANSWER: agency. Conversely, more job offers will be made above $52,000 at the second agency.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 2:06 AM DATE MODIFIED: 2/22/2017 3:33 PM 34. Stephen is starting a wine cellar but only wants to stock bottles in the top 10% of Wine magazine's ratings of 500 wines. The average rating given by the magazine was 72 with a standard deviation of 7.1. Use the standard distribution table to help Stephen discover what wine rating is necessary for a wine to be in the top 10%.

Page 15

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses

ANSWER:

If Stephen only wants to look at the top 10%, he wants a score in the 90th percentile, which means that 90% of the wines will fall below that mark. The probability closest to 0.90 in the standard normal table is associated with a z-score of 1.28. The data value associated with a z-score of 1.28 is 81.088. Stephen should focus on wines with a rating above 81.

Page 16

Name:

Class:

Date:

Chapter 01 - Discretionary Expenses

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 2:22 AM DATE MODIFIED: 2/11/2017 5:09 AM 35. Sarah is a server at a restaurant and has been keeping track of the tips she receives. The smallest bill she received a tip for was $24.44, and the largest bill was $89.75. She used linear regression to model tips received (y) as a function of the restaurant bill (x). Using her data, she wrote a linear regression equation of y = 0.22x-0.27. Sarah would really like to get a $50 tip. Based on her linear regression equation, what would the restaurant bill have to be to lead to a $50 tip? Would this calculation be considered interpolation or extrapolation? To get a tip of $50.00, the restaurant bill would have to be $228.50. Since $228.50 is not in the ANSWER: domain of the data Sarah collected, it would be considered extrapolation.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 2:29 AM DATE MODIFIED: 2/22/2017 3:35 PM

Page 17

Name:

Class:

Date:

Chapter 02 - Banking Services 1. Aaron wants to know how much he needs to save each month in his savings account to have a certain amount in the future. He should use the formula for present value of a periodic deposit investment. a. True b. False ANSWER: False RATIONALE: He should use the future value of periodic investment. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/25/2017 3:26 AM DATE MODIFIED: 2/13/2017 12:15 AM 2. Interest compounded semiannually is compounded four times a year. a. True b. False ANSWER: False RATIONALE: Semiannual compounding is interest compounded twice per year, or every six months. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/25/2017 3:28 AM DATE MODIFIED: 2/7/2017 7:15 AM 3. To reconcile a check register means to match all the entries in the register with the statement received from the bank and correct any discrepancies. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/25/2017 3:30 AM DATE MODIFIED: 2/7/2017 7:15 AM 4. Maxine deposited $1,000 into an account that pays 4.5% interest, compounded daily. At the end of six months, she has earned $12 in interest. a. True b. False ANSWER: False RATIONALE:

POINTS: 1 QUESTION TYPE: True / False Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 02 - Banking Services

HAS VARIABLES: False DATE CREATED: 1/25/2017 3:30 AM DATE MODIFIED: 2/7/2017 7:17 AM 5. The Federal Deposit Insurance Corporation insures bank accounts up to a particular amount. This means that if the bank fails, the money is guaranteed by the government. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/25/2017 3:49 AM DATE MODIFIED: 2/13/2017 12:15 AM 6. Compound interest earns more than simple interest at the same interest rate because compounding pays interest on the interest earned. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/25/2017 3:50 AM DATE MODIFIED: 2/7/2017 7:18 AM 7. Annual percent yield is higher than the annual percentage rate because APY takes into account the additional interest earned by compounding. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/25/2017 3:57 AM DATE MODIFIED: 2/7/2017 7:18 AM 8. James and Terry open a savings account that has a 2.75% annual interest rate, compounded monthly. They deposit $500 into the account each month. How much will be in the account after 20 years? a. $48,407.45 b. $159,744.59 c. $330,600.15 d. $580,894.18 ANSWER: b Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 02 - Banking Services RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 3:58 AM DATE MODIFIED: 2/13/2017 12:18 AM 9. Margarite wants to take a trip to Japan in 8 years. She knows she will need about $4,200. How much should she deposit into an account now that pays 3.5% interest, compounded daily, to meet her goal? Round to the nearest dollar. a. $1,026 b. $1,706 c. $3,174 d. $3,781 ANSWER: c RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 4:03 AM DATE MODIFIED: 2/13/2017 12:20 AM 10. Tamika opened a money market account that has a 4.25% annual interest rate, compounded annually. She deposits $1,750 into the account each year. How much interest will the account earn after 15 years? a. $9,419.40 b. $33,949.40 c. $35,699.40 d. $71,398.40 ANSWER: a RATIONALE:

POINTS: 1 QUESTION TYPE Multiple Choice : HAS VARIABLES: False DATE CREATED: 1/25/2017 4:10 AM DATE MODIFIED: 2/13/2017 12:22 AM Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 02 - Banking Services

11. Jackson deposited $5,000 at 3.8% interest, compounded continuously, when he was 18 years old. How much will be in the account when he is 40 years old if he made no other deposits or withdrawals? a. $19,000.19 b. $11,535.60 c. $10,691.38 d. $8,800.00 ANSWER: b RATIONALE: POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 4:15 AM DATE MODIFIED: 2/13/2017 12:24 AM 12. Loretta deposits $350 every quarter into a savings account that earns 4.5% interest compounded quarterly. What is the balance after 7 years? a. $10,312.63 b. $11,344.18 c. $11,444.27 d. $12,477.74 ANSWER: c RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 4:19 AM DATE MODIFIED: 2/13/2017 12:26 AM 13. Bob and Kathy want to save a total of $500,000 for retirement. How much should they deposit monthly into an account that pays 3.9% interest, compounded monthly, to meet their goal in 24 years? a. $950.41 b. $2,102.34 c. $1,051.17 d. $4,446.41 ANSWER: b RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 4:40 AM Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 02 - Banking Services DATE MODIFIED: 2/13/2017 12:28 AM 14. How much more would $1,000 earn in 5 years in an account compounded continuously than in an account compounded quarterly if the interest rate on both accounts is $3.7%? a. $86.40 b. $51.07 c. $36.10 d. $1.02 ANSWER: d RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 4:46 AM DATE MODIFIED: 2/13/2017 12:30 AM 15. LaToya has $113.94 in her checking account. During the week, she goes to an ATM and withdraws $40. She is charged a usage fee of $2.50. The following week she deposits her paycheck of $189.73. She writes two checks, one for $22.50 and the other for $70.18. What is the current balance in her checking account? a. $170.99 b. $168.49 c. $145.99 d. –$21.24 ANSWER: b RATIONALE: 113.94 – (40 + 2.5) + 189.73 – 22.5 – 70.18 = $168.49 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 5:16 AM DATE MODIFIED: 2/13/2017 12:32 AM 16. Conrad Savings Bank has a $50 overdraft fee. On Friday, Mr. McQuire deposited his paycheck of $468.92 for a total account balance of $712.34. The next morning, his wife wrote a check for $1,267.45 for a new refrigerator and stove. The check cleared the bank by the end of the day. What is the current balance in the McQuires’ account? a. –$798.53 b. –$605.11 c. –$555.11 d. –$405.11 ANSWER: b RATIONALE: 712.34 – 1,267.45 – 50 = –$605.11 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 5:19 AM DATE MODIFIED: 2/13/2017 12:33 AM Copyright Cengage Learning. Powered by Cognero.

Page 5

Name:

Class:

Date:

Chapter 02 - Banking Services 17. Erin has a balance of $1,150.34 in her check register. On her statement, the balance of her account is $844.93. Not reported on the bank statement are deposits of $125.56, $50, and $212.34. There are outstanding checks in the amount of $15 and $78.25 and an ATM withdrawal of $40. After Erin reconciles her check register with her statement, what entry does she need to make in her register? a. Adjusting entry of $101.76 b. Adjusting entry of –$101.76 c. Adjusting entry of $50.76 d. Adjusting entry of –$50.76 ANSWER: d RATIONALE: Subtract the deposits from Erin’s balance and add the outstanding checks. Erin’s resulting balance is $895.69, which is $50.76 more than the statement. Erin needs to adjust her check register by subtracting $50.76 to balance with her statement. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 5:59 AM DATE MODIFIED: 2/13/2017 12:35 AM 18. Malcolm wants to make a deposit into an account that earns interest. He wants to be able to access the money on a limited basis. What type of account should he NOT consider? a. Money market account b. Statement savings account c. Certificate of deposit (CD) d. Savings account ANSWER: c RATIONALE: There are no deposits or withdrawals from a CD without penalty. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/25/2017 6:02 AM DATE MODIFIED: 2/13/2017 12:36 AM 19. What does the variable n represent in the formula below?

n is the number of times interest is compounded annually. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:06 AM DATE MODIFIED: 2/13/2017 12:37 AM 20. Amy opened a savings account with $1,750 she received for graduation. The account pays 4.3% simple interest. What is the balance after 6 months? ANSWER: $1,787.63; I = prt = 1,750  0.043  0.5 ≈ 37.63; 1,750 + 37.63 = $1,787.63 POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 02 - Banking Services QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:08 AM DATE MODIFIED: 2/13/2017 12:39 AM 21. What is the interest earned on $20,000 for 5 years, at an interest rate of ANSWER:

$3,944.35;

% compounded continuously? ; 23,944.35 – 20,000 = $3,944.35

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:11 AM DATE MODIFIED: 2/13/2017 12:40 AM 22. Tammy sold a diamond ring for $10,000. She placed half of the money into a CD with a 3.9% interest rate compounded daily. She placed the other half into a CD with the same interest rate but compounded monthly. What is the difference in the interest earned on each amount after 4 years? The account compounded daily earns $1.43 more. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:16 AM DATE MODIFIED: 2/13/2017 12:41 AM 23. Huong deposits $2,000 into an account that earns 4.2% interest compounded daily. What is the annual percentage yield (APY) to the nearest hundredth of a percent? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:21 AM DATE MODIFIED: 2/13/2017 12:43 AM 24. Tyrone opens an account at the local bank by depositing $50 of his birthday money. He continues to deposit $50 each

Page 7

Name:

Class:

Date:

Chapter 02 - Banking Services month for 5 years. If the account pays

% interest compounded monthly, how much is in the account after 5 years?

ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:26 AM DATE MODIFIED: 2/13/2017 12:56 AM 25. Carmencita is 12 years old and she is saving for a car. She wants to have $5,000 by the time she is 16 years old. She opens a savings account with an APR of 3.9% compounded weekly. How much should she deposit into her account each week to meet her goal? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:29 AM DATE MODIFIED: 2/13/2017 12:58 AM 26. Sonja and Jake just got married. They received $4,500 in gift money and deposited it into a savings account that pays 2.85% simple interest. How much will they have in savings after 3 years? ANSWER: $4,884.75; I = prt = 4,500  0.0285 3 = 384.75; 384.75 + 4,500 = $4,884.75 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:40 AM DATE MODIFIED: 2/13/2017 12:59 AM 27. Ashley and Dwayne are saving for retirement. Their goal is to have $250,000 in 15 years. They open up an account with an APR of 3.7% compounded monthly. How much should they deposit each month to meet their goal? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 02 - Banking Services HAS VARIABLES: False DATE CREATED: 1/25/2017 6:43 AM DATE MODIFIED: 2/24/2017 2:46 PM 28. Edward wants to have $50,000 in 10 years for college. What single deposit would he need to make now into an account that pays 4.3% interest, compounded daily, to meet his goal? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:47 AM DATE MODIFIED: 2/13/2017 1:00 AM 29. Ron and Annie have $1,239.45 in their checking account. During the week, Annie goes to an ATM and withdraws $80. The following week Ron deposits his paycheck of $689.65. Annie then pays bills online in the amounts of: $212.80, $55, $49.76, and $110.35. What is the current balance in their checking account? $1,421.19; 1,239.45 + 689.65 = 1,929.10; ANSWER: 1,929.10 – 212.80 – 55 – 49.76 – 110.35 – 80 = $1,421.19 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:49 AM DATE MODIFIED: 2/13/2017 1:01 AM 30. The Parsons have a balance of $3,664.47 in their check register. On their bank statement, the balance on the account is $2,346.89. Not reported on the bank statement are checks of $324.56, $25.50, $78.92, and $30.25. There are outstanding deposits in the amount of $500 and $1,456.81. There are three ATM withdrawals of $60 each. What do the Parsons need to do to reconcile their checkbook? The Parsons need to do nothing because the account is balanced. ANSWER: 2,346.89 + 500 + 1,456.81 = 4,303.70; 4,303.70 – 3(60) – 324.56 – 25.50 – 78.92 – 30.25 = $3,664.47 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:51 AM DATE MODIFIED: 2/13/2017 1:04 AM 31. Annalise has an online checking account at Wells Fargo Bank. Her balance at the beginning of the month was $5,000.00. During the month, she made deposits totaling $5,478.42, was charged a maintenance fee of $18, and earned $1.87 in interest. Her balance at the end of the month was $4,187.93. Annalise grew concerned because she spent considerably more than she made during the month. How much did Annalise spend during the month? Annalise spent $6,274.36 during the month. ANSWER: 5,000.00 + 5,478.42 − 18.00 + 1.87 − 4,187.93 = 6,274.36 Copyright Cengage Learning. Powered by Cognero.

Page 9

Name:

Class:

Date:

Chapter 02 - Banking Services POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:54 AM DATE MODIFIED: 2/13/2017 1:05 AM 32. Jericho wants to start saving to purchase a house. His goal is to save $95,000. If he deposits $56,000 into an account that pays 3.75% interest compounded daily, approximately how long will it take for his money to grow to the desired amount? Round your answer to the nearest tenth of a year. Jericho needs to wait approximately 14.1 years. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 6:57 AM DATE MODIFIED: 2/13/2017 1:06 AM 33. Landry deposits $10,000 into an account that compounds interest continuously at a rate of 2.375%. How long will it take his money to grow to $11,000? Round your answer to the nearest tenth of a year. Landry needs to wait approximately 4.0 years. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 7:04 AM DATE MODIFIED: 2/13/2017 1:07 AM 34. Anne has opened up a systematic savings account into which she deposits $500 per month compounded monthly at a rate of 7.8%. How long will it take her to reach $500,000? Round your answer to the nearest tenth of a year. Anne needs to wait approximately 25.9 years. ANSWER:

Page 10

Name:

Class:

Date:

Chapter 02 - Banking Services POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 7:07 AM DATE MODIFIED: 2/13/2017 1:08 AM 35. Steve inherited $100,000 from his grandmother and deposited it into an account that compounds interest monthly at a rate of 4.9%. Each month, he withdraws $500 from the account. How long will it take him until the account has a balance of $0? Round your answer to the nearest tenth of a year. Steve’s account will reach $0 in about 34.7 years. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/25/2017 7:14 AM DATE MODIFIED: 2/13/2017 1:10 AM 36. Alesha wants to deposit $25,000 into an account that compounds interest. She hopes to have $40,000 in 7 years for a down payment on a house. What interest rate must she find in order to accomplish her goal? Round your answer to the nearest hundredth of a percent. Alesha needs to find an investment with an APR of 6.71%. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/26/2017 1:14 AM DATE MODIFIED: 2/13/2017 1:11 AM 37. Rajesh invested $30,000 into an account that has a monthly rate of return of 0.79%. He has made arrangements to withdraw $250 automatically every month to pay off his 10-year student loan. Will Rajesh have enough money in the account to cover all of the required loan payments? If so, how long can he continue to withdraw $250 each month to put toward a car payment? (Round to the nearest year.) Yes, he will pay it off in 10 years and still have two years to continue making the withdrawals. ANSWER:

Page 11

Name:

Class:

Date:

Chapter 02 - Banking Services

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/26/2017 1:18 AM DATE MODIFIED: 2/13/2017 1:12 AM 38. Curtis deposited $10,000 into an account that compounds interest annually at a rate of 5%. He wants to know how long it will take for his money to double but doesn’t have a calculator with logarithms. If he estimates the answer to his question using the Rule of 72s, and then later tries to verify his estimate with a better calculator, how many days will his estimate be off? Round your answer to the nearest day. Curtis’s estimate will be off by 71 days. ANSWER: Rule of 72s t=72/5=14.4 years

POINTS: 1 QUESTION TYPE Subjective Short Answer : HAS VARIABLES: False DATE CREATED: 1/26/2017 1:24 AM DATE MODIFIED: 2/13/2017 1:15 AM

Page 12

Name:

Class:

Date:

Chapter 03 - Consumer Credit 1. A debit card is a type of charge card of which the monthly bill must be paid in full. a. True b. False ANSWER: False RATIONALE: A debit card is not a credit card or charge card. It acts like an electronic check by which money is deducted from your checking account each time you use it. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 3:33 AM DATE MODIFIED: 2/13/2017 1:20 AM 2. Last month, the ending balance on Maryanne’s MasterCard was $1,789, the average daily balance was $755, and the monthly periodic rate is 1.85%. Her finance charge can be calculated by multiplying the ending balance times the monthly periodic rate. So the finance charge is $1,789  0.0185 = $33.10. a. True b. False ANSWER: False RATIONALE: The finance charge can be found by multiplying the average daily balance times the monthly periodic rate. Maryanne’s finance charge is $755 × 0.0185 = $13.97. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 3:35 AM DATE MODIFIED: 2/13/2017 1:22 AM 3. Taneeka borrowed $12,000 for a car for 6 years at an APR of 7.25%. Her monthly payment will be $206.03. a. True b. False ANSWER: True RATIONALE:

POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 3:55 AM DATE MODIFIED: 2/13/2017 1:25 AM 4. Interest can be the money paid by a bank to a consumer as compensation for keeping his or her money in that bank. Interest can also be the money paid to a bank for the use of its money. a. True Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 03 - Consumer Credit b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 4:02 AM DATE MODIFIED: 2/13/2017 1:25 AM 5. The Truth-in-Lending Act protects consumers from harassment from creditors. a. True b. False ANSWER: False RATIONALE: The Fair Debt Collection Practices Act protects consumers from harassment and unfair collection practices. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 4:03 AM DATE MODIFIED: 2/13/2017 1:26 AM 6. A FICO score is named after its creator, Fair, Isaac, and Company. It summarizes the probability that a person with debt will repay that debt. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 4:04 AM DATE MODIFIED: 2/13/2017 1:27 AM 7. FICO scores range from 300 to about 850. A score above 770 is excellent, a score above 700 is good, and a score below 600 is considered a credit risk. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 4:05 AM DATE MODIFIED: 2/13/2017 1:27 AM 8. The total interest on a 5 year 5.2% loan with a principal of $10,000 is 10,000  0.052  5 = $2,600. a. True Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 03 - Consumer Credit b. False ANSWER: RATIONALE:

False Find the monthly payment, multiply it by the number of months of the loan, and then subtract the principal.

POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 4:06 AM DATE MODIFIED: 2/13/2017 1:32 AM 9. Max found a car he wants to buy that costs $16,000. He can afford to pay $250 a month for the car. His bank offers him a car loan of 7.3%. The length of his loan should be about 5 years, so he can afford the payments. a. True b. False ANSWER: False RATIONALE: The length of the loan will be about 7 years.

POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 4:11 AM DATE MODIFIED: 2/13/2017 1:35 AM 10. Regina pays her credit card balance in full each month. Last month her average daily balance was $345 and the APR is 11.2%. The finance charge on her current month’s statement is $13.22. a. True b. False ANSWER: False RATIONALE: When the balance is paid in full, there is no finance charge. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/26/2017 4:14 AM DATE MODIFIED: 2/13/2017 1:37 AM Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 03 - Consumer Credit 11. Use the summary section of the monthly credit card statement below to calculate the finance charge.

a. $33.54 b. $12.98 c. $10.06 d. $9.38 ANSWER: c RATIONALE: 805 × 0.0125 = $10.06 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/27/2017 7:10 AM DATE MODIFIED: 2/13/2017 1:41 AM 12. Jerry buys a $2,700 motorcycle on a deferred payment plan. There is no down payment and no interest for 18 months. Jerry must make a minimum payment of $75 a month. To avoid a retroactive APR of 21%, he must pay the balance in full before the 18 months has passed. If he pays $75 each month, how much should he pay the last month to avoid the interest charges? a. $1,350 b. $1,425 c. $1,500 d. $2,075 ANSWER: b RATIONALE: $1,425; 17 × 75 = 1,275; 2,700 – 1,275 = $1,425 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 2:07 AM DATE MODIFIED: 2/13/2017 1:47 AM 13. Mantago wants to borrow $10,000 to buy a used car. He examined his budget and decided that he can afford a payment of $200 a month. If his bank offers him an APR of 7.5%, how long should he borrow the money so he can afford his monthly payment? a. 3.5 years b. 4 years c. 4.5 years d. 5 years ANSWER: d RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 03 - Consumer Credit HAS VARIABLES: False DATE CREATED: 1/28/2017 2:10 AM DATE MODIFIED: 2/13/2017 1:49 AM 14. Lisa made this spreadsheet to compare her options when she decided to purchase a living room set on an installment plan.

What spreadsheet formula should she input into F2? a. E2 – A2 – B2 b. A2 – E2 + B2 c. E2 – A2 d. E2 + A2 ANSWER: a RATIONALE: Finances charges are the total of the monthly payment, minus the down payment and the purchase price. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 2:13 AM DATE MODIFIED: 2/13/2017 1:52 AM 15. Isabella wants to purchase a new refrigerator. When she applies for an installment loan at the appliance store, her loan application is turned down. What consumer law says that a lender must give her the reason, in writing, that she was denied the loan? a. Truth-in-Lending Act b. Equal Opportunity Act c. Fair Credit Reporting Act d. Fair Debt Collection Practices Act ANSWER: c POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 3:30 AM DATE MODIFIED: 2/13/2017 1:53 AM 16. Yanni received her monthly credit card statement in the mail, the summary of which is shown below. When she calculated the new balance for the month, she arrived at a different amount than the credit card company. What should be the correct new balance?

Page 5

Name:

Class:

Date:

Chapter 03 - Consumer Credit

a. $3,576.28 c. $3,766.28 ANSWER: RATIONALE:

b. $3,676.28 d. $3,776.28 d Finance charges should be (21% ÷ 12) for a monthly periodic rate of 1.75%. $3,558.71 × 0.0175 = $62.28; $82.28 – $62.28 = 20.00; the finance charge is $20 too high. So the new balance should be $3,796.28 – $20 = $3,776.28. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 3:31 AM DATE MODIFIED: 2/13/2017 1:59 AM 17. Dr. Drake is thinking about retirement and decides to sail around the world once he retires. He buys a sailboat for $125,000. He borrows the money at an APR of 7.5% for five years. How much will his total interest be? a. $46,875.30 b. $36,875.40 c. $25,284.40 d. $17,388.80 ANSWER: c RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 3:38 AM DATE MODIFIED: 2/13/2017 2:03 AM 18. Jackson and Kate Jones do not pay their credit card in full each month, so they incur finance charges. On their last credit card statement, the average daily balance is $875, and the monthly periodic rate is 2.25%. What should be the finance charge on the statement? a. $19.69 b. $20.25 c. $87.50 d. $196.88 ANSWER: a RATIONALE: 875 × 0.0225 ≈ 19.69 POINTS: 1 QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 03 - Consumer Credit HAS VARIABLES: False DATE CREATED: 1/28/2017 4:29 AM DATE MODIFIED: 2/13/2017 2:05 AM 19. What is the monthly periodic rate on a loan with an APR of 18.6%? a. 0.62% b. 0.93% c. 1.55% d. 1.86% ANSWER: c RATIONALE: 18.6 ÷ 12 = 1.55 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 4:32 AM DATE MODIFIED: 2/13/2017 2:06 AM 20. Two consumers borrowed $10,000 for 5 years. Bob has a credit score of 650 and has an interest rate of 11.5%, whereas Tyree has a credit score of 710 and has an interest rate of 8.0%. What will be the total difference between what the two men pay? a. $1,030.20 b. $2,165.40 c. $2,195.60 d. $3,195.80 ANSWER: a RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 4:33 AM DATE MODIFIED: 2/13/2017 2:12 AM 21. How does a credit card company calculate finance charges on a credit card? Finance charges are based on the average amount the consumer owes each day of the billing cycle. ANSWER: To calculate the charge, multiply the average daily balance by the monthly periodic rate, which is the APR (yearly interest rate) divided by 12. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 7

Name:

Class:

Date:

Chapter 03 - Consumer Credit DATE CREATED: 1/28/2017 4:41 AM DATE MODIFIED: 2/13/2017 2:13 AM 22. Jim wants to buy a computer. The total cost is $1,180. If he can save $60 a month, how long will it take for him to save up for the computer? About 20 months; 1,180 ÷ 60 ≈ 19.67 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 4:42 AM DATE MODIFIED: 2/13/2017 2:14 AM 23. Rick carries a balance on his credit card each month. Today is the first day of the new, 28-day billing cycle. The current balance is $2,360 and the APR is 21%. Rick is buying a friend an expensive gift that costs $1,500 that he plans to put on his credit card. This will be his only purchase this month. How much in finance charges can he save by making the purchase on the last day of the billing cycle versus the first day of the billing cycle? ANSWER: First day of cycle: (2,360 + 1,500)  (0.21 ÷ 12) = 67.55 Last day of cycle: (2,360  27) + 3,860 = 67,580 ÷ 28 = 2,413.57 2,413.57  (0.21 ÷ 12) = 42.24 67.55 − 42.24 = $25.31 He can save $25.31 by waiting to charge the $1,500 gift until the last day. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 4:44 AM DATE MODIFIED: 2/13/2017 2:15 AM 24. Trey is taking out a loan for $85,000. It is a 20-year loan with an APR of 5.85% What will his monthly payment be? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 4:46 AM DATE MODIFIED: 2/13/2017 2:16 AM 25. According to the credit calendar below, what is the average daily balance?

Page 8

Name:

Class:

Date:

Chapter 03 - Consumer Credit

Page 9

Name:

Class:

Date:

Chapter 03 - Consumer Credit 26. Loretta was on vacation when her wallet was stolen. By the time she reported her three credit cards missing, the criminal had charged over $10,000 on each card. How much of this will Loretta have to pay? $150; $50 per card ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 4:53 AM DATE MODIFIED: 2/13/2017 2:24 AM 27. Miriam and Dave want to borrow $25,000 to put an addition on their house. They went over their budget, and they can afford to pay $450 a month. If the bank offers them a home improvement loan with an APR of 6.3%, what should the length of the loan be so they can afford the monthly payments? The length of the loan will be about 5.5 years. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 4:55 AM DATE MODIFIED: 2/13/2017 2:27 AM 28. Malika has a credit card balance of $321. Her available credit on this card is $4,679. What is her credit line on this card? $5,000; 4,679 + $321 = 5,000 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 4:57 AM DATE MODIFIED: 2/13/2017 2:28 AM 29. Yoshi carries a balance on her credit card each month. In May, she decides she wants to use her card to buy a new dishwasher. In which part of the billing cycle should she make her purchase to keep her finance charges to the minimum? She should make the purchase later in the billing cycle to keep her average daily balance lower, ANSWER: thus lowering her finance charges. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:00 AM DATE MODIFIED: 2/13/2017 2:29 AM 30. Jamal is going to borrow $14,000 from his credit union to buy a used car. The APR is 7.0% and the length of the loan Copyright Cengage Learning. Powered by Cognero.

Page 10

Name:

Class:

Date:

Chapter 03 - Consumer Credit is 4 years. How much will Jamal pay in interest? Find the monthly payment, multiply it by the number of months of the loan, and then subtract the ANSWER: principal.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:01 AM DATE MODIFIED: 2/13/2017 2:31 AM 31. Cedric purchased a new refrigerator and stove at Home Depot for $3,729 on a deferred payment plan with no down payment and no payment at all for six months. If the entire $3,729 is paid in full before three months is up, there is no interest. If it is not paid in full within the six months, there is a finance charge with an APR of 25.4% applied each month going back to the first month. If Cedric makes the full payment a week after the six months expired, what is the finance charge? Find the finance charge on the first month by multiplying 3,729 by the monthly interest rate and ANSWER: adding it to the existing balance. Find the finance charge for the second and third months similarly.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:05 AM DATE MODIFIED: 2/13/2017 4:02 AM 32. Shania bought a $1,972 drum set on the installment plan. The installment agreement included a 20% down payment and 36 monthly payments of $52.04 each. What is the finance charge? Find the finance charge by multiplying the monthly payment by 36 and adding the down payment ANSWER: to get the total amount for the drum set. Then subtract the cost of the drum set.

Page 11

Name:

Class:

Date:

Chapter 03 - Consumer Credit

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:15 AM DATE MODIFIED: 2/13/2017 4:03 AM 33. Arnold purchased a $1,300 set of golf clubs on a nine-month layaway plan and had to pay a monthly payment of $158.89. What is the fee charged for the layaway plan? Find the layaway fee by multiplying the monthly payment by 9. Then subtract the cost of the golf ANSWER: clubs.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:18 AM DATE MODIFIED: 2/13/2017 4:03 AM 34. Garth had unexpected expenses this month and didn’t have enough in his saving account to pay the rent of $600. He went to Loanshark Larry’s to borrow the money until his next paycheck 15 days from now. Larry charges $100 interest for the 15 days. What is the APR for this payday loan? Find the APR by using the formula for Payday APR. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:20 AM DATE MODIFIED: 2/13/2017 4:04 AM 35. Kenise will begin college as a freshman next fall and has received a 10-year $5,500 Federal Direct Unsubsidized Loan with an interest rate of 6.8%. She will be required to begin making payments six months after graduation. How much interest will accrue while she is still in school and over the six-month grace period? Find the interest by using the simple interest formula for the 4 years plus six-month grace period. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 12

Name:

Class:

Date:

Chapter 03 - Consumer Credit DATE CREATED: 1/28/2017 5:24 AM DATE MODIFIED: 2/13/2017 4:06 AM 36. Rhett is about to begin college and has received a 10-year $7,500 Federal Direct Unsubsidized Loan with an interest rate of 6.4%. He will be required to begin making payments six months after graduation. If Rhett decides to capitalize the interest accrued from the time he receives the funds until he begins making payment, how much total interest would he pay on this loan? Find the capitalized interest by using the simple interest formula for the 4 years plus six-month ANSWER: grace period and add that amount to the loan amount of 7,500. Then determine the monthly payment for the capitalized loan amount and multiply that payment by 120 payments. The total interest will be the difference in the total payments and the original loan amount.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:26 AM DATE MODIFIED: 2/13/2017 4:06 AM 37. George wants to borrow $30,000 to purchase a car. After looking at a monthly budget he realizes that all he can afford to pay per month is $350. The dealership is offering a 4.77% loan. When George hears how much interest he will pay over the life of the loan, he decides to cut back on his entertainment expenses and pay $400 per month. How much in interest will George save by paying an extra $50 per month? Hint: Round any loan length calculations to the nearest quarter of a year. Find the length of the loan with a $350 payment. Multiply the monthly payment by the length of the ANSWER: loan in months and subtract the purchase price from the total payment amount. Do the same for the loan with a $400 payment and subtract the two results.

Page 13

Name:

Class:

Date:

Chapter 03 - Consumer Credit

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 5:55 AM DATE MODIFIED: 2/13/2017 4:10 AM 38. Asa’s most recent credit card statement had a balance of $2,622.77. The minimum payment warning box indicates that it will take 12 years to pay off the card if he makes the minimum payment of $28 per month. If he makes a monthly payment of $100, it will take 3 years to pay off the balance. What will be the percent increase in total payments if Asa only pays the minimum rather than the $100 per month? Multiply the monthly payment by the time required in months to pay off the credit card. Then use ANSWER: the total payments for the $100-per-month option as the basis of comparison in the percent increase formula.

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/28/2017 6:01 AM DATE MODIFIED: 2/13/2017 4:13 AM

Page 14

Name:

Class:

Date:

Chapter 04 - Automobile Ownership 1. Property damage liability pays for injuries to a driver or their passengers caused by an uninsured or underinsured driver. a. True b. False ANSWER: False RATIONALE: Property damage pays for damage caused by a driver to other people’s property. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:14 AM DATE MODIFIED: 2/13/2017 5:54 AM

2. A car traveling at an average rate of 60 miles per hour will drive 270 miles in

hours.

a. True b. False ANSWER: True RATIONALE: 60 × 4.5 = 270 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:15 AM DATE MODIFIED: 2/13/2017 5:55 AM 3. A car traveling on asphalt makes a sudden stop. The drag factor of the road is 0.7 and the brakes are operating at 90% efficiency. If the car leaves 4 distinct skid marks that are 60 feet long, then the car was traveling about 37 miles per hour. a. True b. False ANSWER: False RATIONALE: POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:18 AM DATE MODIFIED: 2/13/2017 6:13 AM 4. In the box-and-whisker plot below, 50% of the data is between 30 and 70.

Page 1

Name:

Class:

Date:

Chapter 04 - Automobile Ownership a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:20 AM DATE MODIFIED: 2/13/2017 6:16 AM 5. Cars with ABS or anti-lock brakes do not leave skid marks. a. True b. False ANSWER: False RATIONALE: ABS leaves dashed skid marks. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:24 AM DATE MODIFIED: 2/13/2017 6:21 AM 6. The fee that a driver pays to have automobile insurance is called a deductible. a. True b. False ANSWER: False RATIONALE: The fee is called the premium. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:25 AM DATE MODIFIED: 2/13/2017 6:22 AM 7. Victor found 5 cars online that he will go to see. The prices of the cars are: $5,000; $4,500; $5,500; $3,999; and $4,999. The median car price is $4,799.60. a. True b. False ANSWER: False RATIONALE: This is the mean price; the median price is $4,999. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:27 AM DATE MODIFIED: 2/13/2017 6:23 AM Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 04 - Automobile Ownership 8. Pamela called nine repair shops for quotes for auto repairs. The prices are $139, $150, $345, $99, $167, $155, $140, $200, and $160. She calculates to find there are no outliers in the data. a. True b. False ANSWER: False RATIONALE: $99, $139, $140, $150, $155, $160, $167, $200, $345 Median $155, lower quartile $139.50, upper quartile $183.50; interquartile range 183.50 – 139.50 = $44; 139.5 – (1.5)44 = $73.50 and 183.50 + (1.5)44 = $249.50 Anything below $73.50 and above $249.50 is an outlier, so $345 is an outlier. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:29 AM DATE MODIFIED: 2/13/2017 6:25 AM 9. Sarah bought a 7-year old car for $10,500. When the car was new, it sold for $21,000. Therefore, the depreciation rate is 9.4%. a. True b. False ANSWER: True RATIONALE:

POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:32 AM DATE MODIFIED: 2/13/2017 6:28 AM 10. Yolanda wants to buy a fuel-efficient car. She finds one that can travel 465 miles on one tank of gas. If the gas tank holds 15 gallons, the car gets about 41 miles per gallon. a. True b. False ANSWER: False RATIONALE: 465 ÷ 15 = 31 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/28/2017 6:36 AM DATE MODIFIED: 2/13/2017 6:37 AM 11. Mrs. Beluga is driving on a snow-covered road with a drag factor of 0.2. She brakes suddenly for a deer. The tires leave a yaw mark with a 52-foot chord and a middle ornate of 6 feet. What is the minimum speed she could have been going? Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 04 - Automobile Ownership a. 13.3 mph c. 30.2 mph ANSWER: RATIONALE:

b. 23.6 mph d. 46.3 mph a

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 6:57 AM DATE MODIFIED: 2/13/2017 6:54 AM 12. Tonya wants to place an advertisement in a local newspaper to sell her car. This piecewise function shows in the cost of the advertisement given that x equals the number of lines.

If the advertisement she wants to place will be 7 lines, how much will the paper charge her? a. $32.50 b. $29.00 c. $26.50 d. $22.00 ANSWER: a RATIONALE: 22 + 3.5(7 − 4) = 22 + 3.5(3) = 22 + 10.5 = $32.50 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 7:00 AM DATE MODIFIED: 2/13/2017 6:57 AM 13. Larry’s car is worth $18,000 after 5 years. When the car was new, it sold for $24,000. What is the depreciation rate? a. 0.5% b. 0.6% c. 5.6% d. 6.9% ANSWER: c RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 7:07 AM DATE MODIFIED: 2/13/2017 7:02 AM 14. Marcia wants to get a new car stereo. She researches the cost with a variety of local car stereo installers and places her findings in a stem-and-leaf plot. 9 5 8 9 9 9 Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 04 - Automobile Ownership 10 11 12 13 14

4 0 0 0 0

7 0 0 9

8 5 0

9 5

10|7 = $107 What is the median price? a. $110 b. $115 c. $119 d. $120 ANSWER: b RATIONALE: The median is the middle number, which will be the 11th value. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 7:10 AM DATE MODIFIED: 2/13/2017 7:04 AM 15. Saheel has $20,000 property damage insurance and $5,000 comprehensive and collision insurance with a $500 deductible. One evening he slides on a patch of ice and hits a parked car, causing $4,500 worth of damage. The accident causes $1,750 of damage to his own car. How much will the insurance pay to fix both cars? a. $5,750 b. $6,250 c. $8,250 d. $24,500 ANSWER: a RATIONALE: 4,500 + 1,750 = 6,250 − 500 = $5,750 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/28/2017 7:12 AM DATE MODIFIED: 2/13/2017 7:06 AM 16. Tony shops around for a new muffler for his car and gets these estimates: $145, $195, $150, $135, $169, $210, and $160. What are the four quartiles? a. Q1=$145, Q2=$160, Q3=$195, Q4=$210 b. Q1=$135, Q2=$145, Q3=$195, Q4=$210 c. Q1=$145, Q2=$150, Q3=$169, Q4=$210 ANSWER: RATIONALE:

d. Q1=$135, Q2=$160, Q3=$195, Q4=$210

a 135, 145, 150, 160, 169, 195, 210; Q1 = median of lower half = 145, Q2 = median = 160, Q3= median of upper half = 195, Q4 = greatest value = 210

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/30/2017 4:28 AM DATE MODIFIED: 2/13/2017 7:10 AM Copyright Cengage Learning. Powered by Cognero.

Page 5

Name:

Class:

Date:

Chapter 04 - Automobile Ownership 17. Cherie pays her car insurance monthly. Her annual premium is $984. Each month she is charged a $2 convenience fee. If her annual premium is divided equally into twelve monthly payments, how much is her monthly insurance payment? a. $94 b. $92 c. $84 d. $82 ANSWER: c RATIONALE: 984 ÷ 12 = 82 + 2 = $84 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/30/2017 4:53 AM DATE MODIFIED: 2/13/2017 7:11 AM 18. Nathan wants to buy a car that costs $25,920. He has $3,000 as a down payment, and his payments will be $450 for 6 years. Through research he discovers that the value of the car will depreciate to a value of zero in 12 years. After how long will the expenses of the car be equal to the value of the car? a. 2 years b. 3 years c. 4 years d. 5 years ANSWER: b RATIONALE: Use expense equation y = 450x + 3,000 and depreciation equation y = –180x + 25,920. Where they intersect, at about 36.4 months, is where the expense and depreciation are equal.

Page 6

Name:

Class:

Date:

Chapter 04 - Automobile Ownership

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/30/2017 4:56 AM Copyright Cengage Learning. Powered by Cognero.

Page 7

Name:

Class:

Date:

Chapter 04 - Automobile Ownership DATE MODIFIED: 2/13/2017 7:17 AM 19. Craig is an accident reconstructionist. He arrives at an accident where there are 4 skid marks of different lengths. He finds their measures to be 85 ft, 92 ft, 88 ft, and 90 ft. It is an asphalt road with a drag factor of 0.8. Because he does not know the efficiency of the driver’s brakes, he assumes a brake efficiency of 80%. What is the minimum speed the driver could have been going? a. 31.6 mph b. 38.2 mph c. 41.3 mph d. 46.2 mph ANSWER: c Take the average of the skid marks: ( 85 + 92 + 88 + 90) ÷ 4 = 88.75; use the skid speed formula: RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/30/2017 4:59 AM DATE MODIFIED: 2/13/2017 7:20 AM 20. Jeanette buys decals for her car from every state she visits. She made a list of the prices: $0.99, $5.10, $1.59, $1.99, $2.99, $0.80, $1.99, $1.99, $2.99, $1.59, $0.99, $3.49, and $0.80. Find the mean. a. $2.10 b. $1.99 c. $0.99 d. $0.80 ANSWER: a RATIONALE: 27.30 ÷ 13 = $2.10 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/30/2017 5:09 AM DATE MODIFIED: 2/13/2017 7:21 AM 21. Jackson bought his first car. He went to an insurance office to get car insurance. Which of these types of insurance is the minimum required by law? a. Uninsured motorist protection b. Bodily injury liability c. Comprehensive insurance d. Collision insurance ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/30/2017 5:14 AM DATE MODIFIED: 2/13/2017 7:23 AM 22. Gretchen has 50/100/50 liability insurance with a $500 deductible. While parked on the street, another car hits hers and then leaves the scene. There was $2,350 worth of damage. How much of the cost will her insurance pay? None; 50/100 is bodily injury and 50 is property damage coverage. Collision coverage would have ANSWER: paid for this, but Gretchen does not carry it. Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 04 - Automobile Ownership POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:21 AM DATE MODIFIED: 2/13/2017 7:24 AM 23. Monte recorded the gas mileage, in miles per hour, of ten cars he is considering buying: 34, 27, 30, 24, 28, 31, 42, 30, 29, and 19. Put the data in a stem-and-leaf plot. 1 9 ANSWER: 2 4 7 8 9 3 0 0 1 4 4 2 3|4 = 34 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:23 AM DATE MODIFIED: 2/14/2017 1:59 AM 24. A car that Sophia wants to buy costs $21,000. She does research and finds that after 14 years the car depreciates to a value of zero. If the car depreciates in straight line form, write the straight line depreciation equation. ANSWER: (0, 21,000), (14, 0); so the slope is Equation: y = –1,500x + 21,000 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:24 AM DATE MODIFIED: 2/14/2017 2:00 AM 25. The Jacksons are taking a trip to Florida. Mr. Jackson knows that it is about 945 miles to their destination in Florida from their home in Ohio. He knows the average speed along his route will be 70 miles per hour. How long is the drive? 945 ÷ 70 = 13.5 hours ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:27 AM DATE MODIFIED: 2/14/2017 2:01 AM 26. Aaron just bought a used car from his cousin for $3,500. When he changes the title and gets license plates, he is required to pay sales tax on the purchase price of the car. If the sales tax rate is

%, how much sales tax does he pay?

$218.75; 3,500 × 0.0625 = 218.75 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer Copyright Cengage Learning. Powered by Cognero.

Page 9

Name:

Class:

Date:

Chapter 04 - Automobile Ownership HAS VARIABLES: False DATE CREATED: 1/30/2017 5:27 AM DATE MODIFIED: 2/14/2017 2:02 AM 27. Nina’s car exponentially depreciates at a rate of 7% per year. If Nina bought the car when it was 6 years old for $12,000, what was the original price of the car? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:31 AM DATE MODIFIED: 2/14/2017 2:04 AM 28. At the beginning of the week, Miguel’s odometer reads 87,845. At the end of the week, his odometer reads 88,033. How many miles did Miguel travel that week? 88,033 – 87,845 = 188 miles ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:34 AM DATE MODIFIED: 2/14/2017 3:49 AM 29. Maria works for an online auto trader. She makes a piecewise function to show the cost to place an online advertisement.

What is the cusp of the function? (6, 39) ANSWER:

Page 10

Name:

Class:

Date:

Chapter 04 - Automobile Ownership

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:35 AM Copyright Cengage Learning. Powered by Cognero.

Page 11

Name:

Class:

Date:

Chapter 04 - Automobile Ownership DATE MODIFIED: 2/14/2017 3:55 AM 30. Don buys a car valued at $25,000. When the car was new, it sold for $32,000. If the car depreciates exponentially at a rate of 7% per year, about how old is the car? ANSWER: About 3.4 years old;

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 5:41 AM DATE MODIFIED: 2/14/2017 3:57 AM 31. Benjamin currently pays $1,080 for his annual car insurance premium. He is in the Marines and will be deployed for the next 9 months. Since his car will be used much less, there is less risk for the insurance company and it offers him a 66% discount for his annual premium while on deployment. What is the amount he must save each month while on deployment to be able to pay for the discounted premium? When Benjamin returns, his premium will revert to the amount prior to deployment. What will his total premium for the year be? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 6:23 AM DATE MODIFIED: 2/14/2017 4:05 AM 32. The ratio of driving accidents that occur in Ohio while texting to those that are not a result of distracted driving is 7:2. If there were 972 accidents on Ohio roads, how many of them were due to texting? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 6:27 AM DATE MODIFIED: 2/14/2017 4:08 AM 33. Lawrence recently purchased a new car for $32,000. His research through Kelly Blue Book gave him a straight-line depreciation model of y = −3,500x + 32,000. He hopes to sell the car after its value has decreased by 40%. Lawrence’s car payment is $630 per month for 60 months. How many months will it take before he tries to sell his car? If he is successful in selling the car for his goal price, what will the cost of the car have been per month after he pays off his loan? Copyright Cengage Learning. Powered by Cognero.

Page 12

Name:

Class:

Date:

Chapter 04 - Automobile Ownership ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 6:40 AM DATE MODIFIED: 2/14/2017 4:09 AM 34. Guy is being transferred from his home in Cincinnati, Ohio, to Sedona, Arizona. Google Maps tells him the driving distance is 1,725 miles. Guy’s research tells him that the speed limits will vary from 50 mi/hr to 75 mi/hr. If he is able to drive at a speed that is an average of these rates, how long will he be driving? Express your answer in hours and minutes. His company is paying for his moving expenses at a rate of $0.54/mile plus $50.00 per hour of driving time. How much will Guy’s company pay him for moving expenses? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 7:05 AM DATE MODIFIED: 2/14/2017 4:10 AM 35. Betsy has $15,000 worth of property damage insurance and $11,000 comprehensive and collision insurance with a $1,000 deductible. She had a tire blowout while driving and crashed into another vehicle before hitting a $5,540 fire hydrant. The accident caused $13,100 of damage to her car and $25,000 worth of damage to the other vehicle. How much of the damages will Betsy have to pay? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 7:10 AM Copyright Cengage Learning. Powered by Cognero.

Page 13

Name:

Class:

Date:

Chapter 04 - Automobile Ownership DATE MODIFIED: 2/14/2017 4:12 AM 36. Zach uses his car for business and must keep accurate driving records so that his company will reimburse him for car expenses. When he started his trip, the odometer read 26,645. When he returned home, the odometer read 28,017. Zach’s car gets about 48 miles per gallon. If the tank was full at the beginning of the trip and it cost $62.28 to fill the tank at the end of the trip, what price did Zach pay per gallon? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 7:18 AM DATE MODIFIED: 2/14/2017 4:13 AM 37. How many feet and inches does a car traveling at 48 miles per hour cover in one second? ANSWER: 70 feet and 5 inches POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 7:22 AM DATE MODIFIED: 2/14/2017 4:14 AM 38. Kenya is driving on the highway at a speed of 75 mph. She sees an accident about 500 feet ahead and must come to a complete stop. Should Kenya swerve to avoid a collision with the accident ahead? ANSWER: Kenya should not swerve. She will stop in time. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 7:26 AM DATE MODIFIED: 2/14/2017 4:15 AM 39. Djenabah has an insurance policy that requires her vehicle to be properly maintained. If she is in an accident, the insurance company will only pay if the brake efficiency is over 60%. Unfortunately, Djenabah was in an accident. She was driving at a speed of 32 mph on a road that had a drag factor of 0.81. The insurance company’s investigator measured three skid mark lengths of 70 ft, 72 ft, and 74 ft. Will the insurance company pay Djenabah’s claim?

Page 14

Name:

Class:

Date:

Chapter 04 - Automobile Ownership ANSWER:

Djenabah’s insurance company will not pay for her claim because she failed to maintain her according to the company’s safety standards. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/30/2017 10:57 PM DATE MODIFIED: 2/14/2017 4:16 AM

Page 15

Name:

Class:

Date:

Chapter 05 - Employment Basics 1. Employers are usually charged a flat fee to place classified ads in the newspaper. a. True b. False ANSWER: False RATIONALE: Employers are usually charged per line of text for classified ads. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:27 PM DATE MODIFIED: 2/14/2017 4:20 AM 2. Social Security tax is paid on all your income, whereas Medicare tax is paid up to the maximum taxable income amount. a. True b. False ANSWER: False RATIONALE: It is the opposite; Medicare tax is paid on all your income, whereas Social Security tax is paid up to the maximum taxable income amount. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:29 PM DATE MODIFIED: 2/14/2017 4:21 AM 3. Blinko’s charges $24.99 to print 100 top-quality, single-page résumés. Each additional 50 copies cost $10. This cost, r(x), written as a piecewise function, is:

a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:32 PM DATE MODIFIED: 2/14/2017 4:22 AM 4. The purpose of worker’s compensation is to offer benefits to eligible employees that have become unemployed. a. True b. False ANSWER: False RATIONALE: Worker’s compensation pays benefits to injured workers. Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 05 - Employment Basics POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:36 PM DATE MODIFIED: 2/14/2017 4:26 AM 5. Bruce is paid semimonthly, so he receives 24 paychecks a year. a. True b. False ANSWER: True RATIONALE: True; semimonthly is two checks a month for 12 months. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:39 PM DATE MODIFIED: 2/14/2017 4:27 AM 6. McKenzie sells textbooks. She receives 7% on her first $1,000 in sales and 15% on the balance of her sales. If her sales in one month were $14,500, she would earn $2,025 in commission. a. True b. False ANSWER: False RATIONALE: 0.07 × 1,000 = $70; 0.15 × (14,500 – 1,000) = 2,025; she would earn 2,025 + 70 = $2,095 in commission. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:41 PM DATE MODIFIED: 2/14/2017 4:29 AM 7. Jim was offered a job as a computer programmer making $65,000 per year. Another company offered Jim a position earning $1,200 a week. The job with the $65,000 salary pays more. a. True b. False ANSWER: True RATIONALE: 65,000 ÷ 52 = 1,250 > 1,200 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:52 PM DATE MODIFIED: 2/14/2017 4:37 AM 8. Royalty is a percentage paid on the money earned from sales on items such as tickets, books, artwork, and music CDs. a. True Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 05 - Employment Basics b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:55 PM DATE MODIFIED: 2/14/2017 4:40 AM 9. Cherie accepted a job through an employment agency. The job pays $1,100 a week. The agency charges 30% of her first 4 weeks, pay. To find the amount she owes the agency, she should multiply her first four weeks’ salary by 0.03. a. True b. False ANSWER: False RATIONALE: She should multiply the first four weeks’ salary by 0.3 not 0.03. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/30/2017 11:56 PM DATE MODIFIED: 2/14/2017 4:41 AM 10. This spreadsheet calculates a yearly pension. The formulas are entered in column B. What is the spreadsheet formula for B7? A B 1 Pension Percentage 2 Years Worked 3 Year 1 Salary 4 Year 2 Salary 5 Year 3 Salary 6 Average Salary 7 Yearly Pension a. =average(B3:B5) b. =sum(B3:B5) c. =(B6*B2)/B1 d. =B1/100*B6*B2 ANSWER: d RATIONALE: Yearly pension is the product of the pension percent as a decimal, the 3-year average, and the number of years worked. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 12:15 AM DATE MODIFIED: 2/14/2017 4:42 AM 11. In 2008, Yolanda paid $3,875 in Social Security tax. If the Social Security tax rate was 6.2% to the maximum income of $94,200 that year, what was Yolanda’s taxable income? a. $6,250 b. $38,750 Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 05 - Employment Basics c. $62,500 d. $66,375 ANSWER: c RATIONALE: $62,500; 0.062x = 3,875; x = 62,500 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 12:18 AM DATE MODIFIED: 2/14/2017 4:45 AM 12. What is Medicare? a. Unemployment insurance for workers who involuntarily lose their jobs. b. Health benefits and compensation for workers who get injured on their jobs. c. Benefit pay to workers who retire or become disabled, or to their survivors if the worker dies. d. Health insurance for the disabled and for people over 65. ANSWER: d RATIONALE: Medicare benefits are available to workers who pay into the program either when they retire or if they become disabled. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 12:25 AM DATE MODIFIED: 2/14/2017 4:46 AM 13. In 2005, Lee began working as a nurse anesthetist with a taxable income of $119,000. The Medicare tax was 1.45% and the Social Security tax rate was 6.2% to the maximum income of $90,000 that year. How much did Lee pay in FICA taxes in 2005? a. $9,103.50 b. $7,305.50 c. $5,580.00 d. $1,725.50 ANSWER: b RATIONALE: $7,305.50; (119,000 × 0.0145) + (90,000 × 0.062) = 7,305.50 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 12:28 AM DATE MODIFIED: 2/14/2017 4:47 AM 14. Catalina works part-time at a bakery earning $7.50 an hour. In the past five days, her time card shows that she worked 3.3, 2.9, 4.0, 3.5, and 2.1 hours. What is her gross pay for the five days? a. $118.50 b. $119.50 c. $122.50 d. $125.50 ANSWER: a Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 05 - Employment Basics RATIONALE: $118.50; (3.3 + 2.9 + 4.0 + 3.5 + 2.1) × 7.50 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 1:11 AM DATE MODIFIED: 2/14/2017 4:49 AM 15. Miquel pays $47 semimonthly for health insurance which is 15% of the total cost. His employer pays the rest. What is the total yearly cost to the nearest dollar of Miquel’s health insurance? a. $1,327 b. $3,260 c. $5,485 d. $7,520 ANSWER: d RATIONALE: 47 × 24 = 1,128; 1,128 ÷ 0.15x; x = $7,520 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 1:12 AM DATE MODIFIED: 2/14/2017 4:51 AM 16. This piecewise function represents the Social Security taxes for 2009. How much did Rachel pay in Social Security tax if she earned $102,000 in 2009?

a. $6,824.60 b. $6,355.10 c. $6,324.00 d. $6,220.00 ANSWER: c RATIONALE: $6,324; 102,000 × 0.062 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 1:14 AM DATE MODIFIED: 2/14/2017 4:53 AM 17. Federal and state laws provide rules on the lowest hourly rate that can be paid to a worker in the United States. What is that rate called? a. Regular hours b. Minimum wage c. Double-time d. Maximum wage ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 1:19 AM Copyright Cengage Learning. Powered by Cognero.

Page 5

Name:

Class:

Date:

Chapter 05 - Employment Basics DATE MODIFIED: 2/14/2017 4:54 AM 18. Pimmi gets paid $0.50 for the first 100 craft kits that she assembles. She earns $0.75 for each kit over 100. This week she assembled 135 kits. How much did she earn? a. $67.50 b. $72.50 c. $76.25 d. $101.25 ANSWER: c RATIONALE: 0.5 × 100 = 50 + (35 × 0.75) = $76.25 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 1:27 AM DATE MODIFIED: 2/14/2017 5:06 AM 19. Michelle receives $32,000 per year as an assistant fast food manager. Her benefits include health insurance, paid holidays, retirement contributions, and a two-week paid vacation each year. Because she wears a uniform, Michelle calculates that she saves $2,500 on clothing costs per year. She constructed this table to show the value of each benefit. What is her annual salary, including benefits? Benefit Value Health Insurance $8,250 Paid Holidays $920 Retirement Contributions $4,500 Paid Vacation $1,230 Uniform Supplied $2,500 a. $32,000 b. $42,400 c. $4,690 d. $49,400 ANSWER: d RATIONALE: 8,250 + 920 + 4,500 + 1,230 + 2,500 + 32,000 = 49,400 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 1:28 AM DATE MODIFIED: 2/14/2017 5:04 AM 20. Marcus earned $54,000 last year when the Social Security tax was 6.2% of income up to $94,200. His Medicare tax was 1.45%. How much did he pay in Social Security and Medicare taxes last year? $4,131; 54,000(0.062 + 0.0145) = $4,131 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:31 AM DATE MODIFIED: 2/14/2017 5:05 AM 21. Maryanne began a job that gives her 3 days of vacation each year she is employed, up to a maximum of 24 days of Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 05 - Employment Basics vacation time. How many years will she be at the company when she reaches the maximum amount of vacation time? 24 = 3x; 8 years ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:32 AM DATE MODIFIED: 2/14/2017 5:07 AM 22. Mrs. Brown has been working in a factory for 28 years. She is preparing to retire. Her pension is calculated on the average of her last 3 years’ salaries, when she earned $38,592; $37,590; and $37,010. Her employer will give her 1.8% of that average for each year she worked. Calculate her pension. ($38,592 + $37,590 + $37,010) ÷ 3 = 37,730.67 × 0.018 = 679.15 × 28 = $19,016.20 per year until ANSWER: her death POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:35 AM DATE MODIFIED: 2/14/2017 5:08 AM 23. Juanita gets paid for every apron she embroiders. Last week, she earned $185. If she earns $2.50 for each embroidered piece, how many aprons did she embroider last week? 74 aprons; 185 ÷ 2.5 = 74 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:35 AM DATE MODIFIED: 2/14/2017 5:09 AM 24. A local newspaper charges $18 for the first three lines of a want ad, and then $6.50 for each additional line. Express the cost of an x-line ad, c(x), as a piecewise function. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:36 AM DATE MODIFIED: 2/14/2017 5:10 AM 25. Singh works at a restaurant where he is paid by the hour plus time and a half for his hours over 40. Last week, he worked 3 hours overtime, and his gross pay was $380.48. What is his hourly wage? $8.55 per hour; 40x + 3(1.5x) = 380.48 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer Copyright Cengage Learning. Powered by Cognero.

Page 7

Name:

Class:

Date:

Chapter 05 - Employment Basics HAS VARIABLES: False DATE CREATED: 1/31/2017 1:40 AM DATE MODIFIED: 2/14/2017 5:11 AM 26. If Leona receives her paycheck biweekly, how many checks does she receive in a year? 26 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:43 AM DATE MODIFIED: 2/14/2017 5:11 AM 27. Nancy was laid off and applied for unemployment benefits in July. In her state, the weekly unemployment benefit is 55% of the 26-week average of the two highest-salaried quarters of the year leading to her application. In April, May, and June, Nancy earned a total of $13,500. In January, February, and March, her total income was $12,775. What will Nancy’s weekly benefits be? $555.82; (13,500 + 12,775) ÷ 26 = 1,010.58; 1,010.58 × 0.55 = 555.82 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:45 AM DATE MODIFIED: 2/14/2017 5:27 AM 28. Katelyn sells cars at a used-car dealer on commission. The car lot pays an 18% commission when the profit on a car is under $400, 22% when the profit is at least $400 and less than $1,000, and 24% when the profit is $1,000 or more. Write a piecewise function to represent the commission, c(x) as a function of the profit, x. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 1:47 AM DATE MODIFIED: 2/15/2017 12:00 AM 29. Emily wants to have her résumé printed. The printing company charges $24.50 for the first 100 résumés, and then a flat rate for each additional 100 résumés. Emily pays $48.50 for 300 résumés. How much is the flat rate after the first 100 résumés are purchased? $12; 48.50 – 24.50 = 24; 24 ÷ 2 = 12 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 2:20 AM DATE MODIFIED: 2/14/2017 5:54 AM Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 05 - Employment Basics 30. Alan earned a dollars last year. This year he received a raise of c dollars. He is paid biweekly. Express the difference algebraically between his total biweekly salary this year and last year. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 2:21 AM DATE MODIFIED: 2/14/2017 5:55 AM 31. Adam works at an electronics store, earning $10.25 an hour, and is paid time and a half for any overtime. Last week, he worked 48 hours. His federal tax withheld is 15% and his state tax withheld is 4%. Social Security and Medicare taxes are also withheld. Determine his net pay for the week. $390.95 ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 3:34 AM DATE MODIFIED: 2/15/2017 12:01 AM 32. An online job-search site charges employers fees to post job listings. The price for posting one job is $495.00. If four jobs are posted, the price per job is $450. What is the percent discount? (Round to the nearest tenth of a percent.) 9.1% ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 4:34 AM DATE MODIFIED: 2/15/2017 12:02 AM 33. Leslye is a salesperson at a home improvement center. She is paid a monthly commission that is 7.5% of her first $1,000 in sales and 12% of the balance of her sales. Today she earned $517. What was the total value of the merchandise she sold? $4,683.33 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 4:36 AM Copyright Cengage Learning. Powered by Cognero.

Page 9

Name:

Class:

Date:

Chapter 05 - Employment Basics DATE MODIFIED: 2/15/2017 12:03 AM 34. In Ramona’s state, the weekly unemployment compensation is 55% of the 26-week average for the two highest salaried quarters. Ramona made the same weekly salary for each of the 26 weeks in her two highest quarters. She will receive a weekly unemployment compensation check of $640. What were the total 26-week earnings for Ramona before she lost her job? $30,264 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 4:38 AM DATE MODIFIED: 2/15/2017 12:04 AM 35. David is a salesman for a local Ford dealership. He is paid a percent of the profit the dealership makes on each car. If the profit is under $800, the commission is 25%. If the profit is at least $800 and less than $1,000, the commission rate is 27.5% of the profit. If the profit is $1,000 or more, the rate is 30% of the profit. Find the difference between the commission paid if David sells a car for a $1,000 profit and the commission paid if he sells a car for a $799 profit? $100.25 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 4:44 AM DATE MODIFIED: 2/15/2017 12:05 AM 36. Kenya pays $66.32 biweekly for health insurance, which is 18% of the total cost. Her employer pays the rest. What is the employer’s annual contribution for Kenya’s health insurance? $7,855.24 ANSWER: POINTS: 1 QUESTION TYPE Subjective Short Answer : HAS VARIABLES:False DATE CREATED: 1/31/2017 5:07 AM DATE MODIFIED: 2/15/2017 12:06 AM

37. Isiah just accepted a job that pays an annual salary of $48,800 and was promised a 7.75% raise per year for the next five years if his performance goals are met. Isiah is confident he can meet these goals. What will his biweekly gross pay be when he begins his fifth year with the company? $2,506.57 ANSWER:

Page 10

Name:

Class:

Date:

Chapter 05 - Employment Basics POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 5:12 AM DATE MODIFIED: 2/15/2017 12:07 AM 38. Elijah’s biweekly paycheck 5 years ago resulted in a direct deposit of $1,876.92 into his checking account each period. Today, he received a raise that brought his annual salary to $102.05K. If the benefits and taxes deducted from Elijah’s paycheck are approximately 36% of his gross pay, how much more per month will Elijah have in his monthly budget than he did 5 years ago? Round to the nearest dollar. $1,376 ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 5:19 AM DATE MODIFIED: 2/15/2017 12:08 AM 39. Cherie accepted a job through an employment agency. The job pays $1,100 weekly. The agency charges 22% of her first three months, pay. How much money will the employment agency receive for placing Cherie in her new job? (Round to the nearest dollar.) $14,300 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 1/31/2017 5:21 AM DATE MODIFIED: 2/15/2017 12:09 AM

Page 11

Name:

Class:

Date:

Chapter 06 - Income Taxes 1. The filing status of head of household is for married taxpayers who have dependents. a. True b. False ANSWER: False RATIONALE: Head of household is for single filers with dependents. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:40 AM DATE MODIFIED: 2/16/2017 1:49 AM 2. Schedule A can be filed with any tax form to itemize deductions for items such as property taxes and charitable contributions paid. a. True b. False ANSWER: False RATIONALE: Schedule A can only be filed with Form 1040. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:41 AM DATE MODIFIED: 2/16/2017 1:50 AM 3. A W-2 is an income statement that lists any money earned from interest. a. True b. False ANSWER: False RATIONALE: W-2 is the Wage and Tax Statement and gives information on income and withholding amounts. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:43 AM DATE MODIFIED: 2/16/2017 1:51 AM 4. An income tax filer who is single or married filing jointly, with no dependents and income less than $100,000, may be able to file a 1040EZ form. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 06 - Income Taxes DATE CREATED: 1/31/2017 6:45 AM DATE MODIFIED: 2/16/2017 1:54 AM 5. The long form, also called a 1040, is the only form that a filer can use if he or she has interest income from dividends, alimony, or prize money. a. True b. False ANSWER: False RATIONALE: 1040A can be used for interest income from dividends, but alimony or prize money must be claimed on the long form. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:47 AM DATE MODIFIED: 2/16/2017 1:55 AM 6. In a progressive tax system, taxes decrease as income increases. a. True b. False ANSWER: False RATIONALE: In a progressive tax system, taxes increase as income increases. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:49 AM DATE MODIFIED: 2/16/2017 1:56 AM 7. An exemption is an allowable amount that reduces a person’s taxable income. Examples of an exemption are the taxpayer and his or her dependents. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:50 AM DATE MODIFIED: 2/16/2017 1:56 AM 8. Income tax is paid on earned income such as wages and tips. Income tax is also paid on unearned income such as interest, dividends, rental income, capital gains, and winnings. a. True b. False ANSWER: True POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 06 - Income Taxes QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:51 AM DATE MODIFIED: 2/16/2017 1:57 AM 9. Tax tables list taxable income in intervals. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:51 AM DATE MODIFIED: 2/16/2017 1:57 AM 10. The Mancuso family consists of five children, two parents, and a live-in great aunt. Mr. Mancuso supports each family member; therefore, he can take eight exemptions on his 1040 tax form. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 1/31/2017 6:52 AM DATE MODIFIED: 2/16/2017 1:58 AM 11. Jennifer’s employer withholds $1,500 of her pre-tax wages in a plan that Jennifer can use to pay for unreimbursed medical expenses, childcare, and parental care. What is this plan called? a. Individual retirement account b. Flexible spending account c. Deferred compensation plan d. Medical spending account ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 6:59 AM DATE MODIFIED: 2/16/2017 2:00 AM 12. Use the 2006 tax schedule for married taxpayers filing jointly below. Which equation represents the taxable income in the interval over $123,700 but not over $188,450?

Page 3

Name:

Class:

Date:

Chapter 06 - Income Taxes

a. y = 0.28x – 10,596 b. y = 0.28x + 10,596 c. y = 0.25x – 10,596 d. y = 0.25x + 10,596 ANSWER: a RATIONALE: y = 24,040 + 0.28(x – 123,700) 24,040 + 0.28x – 34,636 = 0.28x – 10,596 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 7:00 AM DATE MODIFIED: 2/16/2017 2:03 AM 13. Lynn is a single mother with two children. She qualifies to file as head of household. Her total income before deductions was $38,900 last year. Her total deductions were $11,450. Her employer withheld $3,150 from her pay for tax. Use the tax table below. How much more will Lynn owe in taxes?

Page 4

Name:

Class:

Date:

Chapter 06 - Income Taxes

Page 5

Name:

Class:

Date:

Chapter 06 - Income Taxes a. $570 b. $563 c. $407 d. $399 ANSWER: d RATIONALE: 3,549 – 3,150 = $399 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 7:05 AM DATE MODIFIED: 2/16/2017 2:05 AM 14. John and Loretta Smith are in the 28% tax bracket. Their joint taxable income is $134,899. If the first $16,050 is taxed at 10%, with the remainder at 28%, how much tax will they owe? a. $29,371.72 b. $30,271.75 c. $34,882.72 d. $38,724.75 ANSWER: c RATIONALE: (16,050 × 0.1) + 0.28(134,899 − 16,050) = 1,605 + 33,277.72 = $34,882.72 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 7:09 AM DATE MODIFIED: 2/16/2017 2:26 AM 15. Look at the W-2 below. What is the total amount of federal, state, and local taxes that were withheld?

a. $13,830.25 c. $19,679.38

b. $18,669.38 d. $23,955.64

Page 6

Name:

Class:

Date:

Chapter 06 - Income Taxes ANSWER: c RATIONALE: 13,830.25 + 4,839.13 + 1,010.00 = $19,679.38 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 7:14 AM DATE MODIFIED: 2/16/2017 2:29 AM 16. Roland had $10,500 in medical expenses last year and has no medical insurance. The IRS allows medical expense deductions for the amount that exceeds 7.5% of a taxpayer’s adjusted gross income. If Roland’s adjusted gross income is $31,000, how much can he claim as a medical deduction? a. $10,500 b. $8,175 c. $7,500 d. $750 ANSWER: b RATIONALE: 31,000 × 0.075 = 2,325; 10,500 − 2,325 = $8,175 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 7:25 AM DATE MODIFIED: 2/16/2017 3:41 AM 17. Janine rented an apartment for $900 a month. After a year, she bought a house with a monthly mortgage of $1,250. At the end of the year, she is able to deduct $4,900 in real estate taxes and $8,400 in interest. Janine’s taxable income is $42,000. Using the tax schedule below, how much was she able to save on her taxes due to her home ownership?

a. $2,940.00 c. $3,903.75 ANSWER: RATIONALE:

POINTS:

b. $3,101.25 d. $6,843.75 a Find the difference between her taxes in the past and her current taxes. Before: 4,481.25 + 0.25(42,000 − 32,550) = $6,843.75 With house: 42,000 − (4,900 + 8,400) = 28,700; 802.50 + 0.15(28,700 − 8,025) = 3,903.75 6,843.75 − 3,903.75 = $2,940.00 1

Page 7

Name:

Class:

Date:

Chapter 06 - Income Taxes QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 7:26 AM DATE MODIFIED: 2/16/2017 3:43 AM 18. Conrad and Jill have a taxable income of $63,670. They discovered that they can receive a $1,500 tax credit for purchasing an energy -efficient furnace. How will this tax credit affect their taxes? a. The tax credit will increase their taxable income by $1,500. b. The tax credit will reduce their taxable income by $1,500. c. The tax credit is added to the tax owed, not the taxable income. d. The tax credit is subtracted from the tax owed, not taxable income. ANSWER: d RATIONALE: Tax credits are deducted from the tax owed once the tax is calculated. Tax deductions are deducted from the taxable income before the tax is calculated. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 1/31/2017 7:32 AM DATE MODIFIED: 2/16/2017 3:44 AM 19. Dawn is verifying the accuracy of her paycheck. She earns $12 an hour and works 40 hours each week. Her biweekly deductions are Social Security 6.2%, Medicare 1.45%, federal withholding tax $73.25, state withholding tax $22.50, and health insurance $37.47. What is her net pay if she is paid biweekly? a. $753.34 b. $779.44 c. $784.34 d. $826.78 ANSWER: a RATIONALE: POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/1/2017 4:23 AM DATE MODIFIED: 2/16/2017 3:46 AM 20. Which statement is NOT true about the differences between the income on a W-2 and that on a 1099 form? a. 1099 income is untaxed where the income on a W-2 is already taxed. b. A 1099 form is for income other than wages. c. The income on a 1099 is money from interest, royalties, rents, and more. d. The 1099 income is not reported to the IRS while the W-2 income is reported. ANSWER: d POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 06 - Income Taxes DATE CREATED: 2/1/2017 4:26 AM DATE MODIFIED: 2/16/2017 3:53 AM 21. Lisa is a single taxpayer whose total income before deductions is $57,392. She was able to reduce her total income by $9,347 by filing Schedule A. Use the tax rate schedule below. How much did she save using Schedule A?

$2,336.75; 9,347 × 0.25 = 2,336.75 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 4:27 AM DATE MODIFIED: 2/16/2017 3:55 AM 22. What is the difference between a tax credit and a tax deduction? Tax credits are subtracted from your tax after you look up the tax owed on a tax table. Deductions ANSWER: are subtracted from your taxable income before you look up the tax you owe on a tax table. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:27 AM DATE MODIFIED: 2/16/2017 3:55 AM 23. Chris’s taxable income is $60,709. She is married, filing jointly. What is her tax?

Page 9

Name:

Class:

Date:

Chapter 06 - Income Taxes

Page 10

Name:

Class:

Date:

Chapter 06 - Income Taxes $8,306 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:29 AM DATE MODIFIED: 2/16/2017 3:57 AM 24. What is the term for a Wage and Tax statement and what is its purpose? W-2; the purpose is to report wages and federal tax, Medicare, and other deductions from income. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:31 AM DATE MODIFIED: 2/16/2017 3:57 AM 25. Kathy and Jeff Miller have a combined income of $93,366. They have 1099 forms which report $1,200 in interest. They also have $4,922 income from rental property. They can reduce their income by $3,500. What is their adjusted gross income? $95,988; 93,366 + 1,200 + 4,922 – 3,500 = $95,988 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:32 AM DATE MODIFIED: 2/16/2017 3:58 AM 26. Abraham is a single taxpayer with no dependents. He received $297 in bank interest and $1,500 for an educational expenses deduction. His charitable contributions were $2,000. Use the information to complete the table below: Wages, tips, and other compensation: $47,513; Social Security withheld based on wages of $47,513; Medicare withheld based on wages of $47,513; federal tax withheld: $4,325; state tax withheld: $2,790. Assume $3,500 per exemption and use the tax rate for the income interval for $32,550 to $78,850 of $4,481.25 + 25% for taxable income over $32,550. Total itemized deductions $ Interest $ Adjusted gross income $ Taxable income $ Tax due $ Tax owed $ ANSWER: Total itemized deductions $6,290 Interest $297 Adjusted gross income $41,223 Taxable income $37,723 Tax due $5,774.50 Tax owed $1,449.50 Itemized deductions: 1,500 + 2,000 + 2,790 Adjusted gross income: 47,513 − 6,290 Copyright Cengage Learning. Powered by Cognero.

Page 11

Name:

Class:

Date:

Chapter 06 - Income Taxes Taxable income: 41,223 − 3,500 Tax due: 4,481.25 + 0.25(37,723 − 32,550) Tax owed: 5,774.50 − 4,325 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:34 AM DATE MODIFIED: 2/16/2017 3:59 AM 27. Nancy does her taxes herself. She filled out this portion of Schedule A below to deduct her mortgage interest of $7,310; her real estate taxes of $3,988; and her state income taxes of $4,080. What error did Nancy make?

Line 15 should be the sum of lines 10 through 14, which is $7,310. It should not include line 9. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:51 AM DATE MODIFIED: 2/16/2017 4:04 AM 28. Maria and Juan are married, filing jointly. Their taxable income is $154,849. Use the table below to write an equation to determine their tax. Then calculate their tax.

Page 12

Name:

Class:

Date:

Chapter 06 - Income Taxes

ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:52 AM DATE MODIFIED: 2/16/2017 4:06 AM 29. What word is synonymous with take-home pay? Net pay ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:55 AM DATE MODIFIED: 2/16/2017 4:06 AM 30. A single mother who files head of household pays a tax of $10,881. Use the table to find her taxable income interval.

Page 13

Name:

Class:

Date:

Chapter 06 - Income Taxes

Page 14

Name:

Class:

Date:

Chapter 06 - Income Taxes Her taxable income is at least $63,250 but less than 63,300. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:55 AM DATE MODIFIED: 2/16/2017 4:08 AM 31. Jennifer and Ken Citizen have a combined income of $145,148. They have 1099 forms which report $4,002 in interest and dividends. During the year, they paid $6,487 in property tax; $9,688 in state and local taxes; $17,573 in federal income tax; and $14,021 in Social Security and Medicare taxes. Tax Freedom Day has been discussed as a concept by which the taxes a family pays are paid first throughout the year until they are paid in full. What is the Tax Freedom Day for this family? Assume it is not a leap year. ANSWER:

There are 26 full days left in April necessary to pay taxes. Sometime near the end of the 117th day (or April 27th), this family will stop working for the government and start working for themselves. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 6:57 AM DATE MODIFIED: 2/16/2017 4:08 AM 32. Juan is a single father of 3, filing as a Head of Household. His income reported on his W-2 was $98,066 and he had interest and dividend income reported on a 1099 of $2,454. During the year, Juan had state and local taxes withheld $5,864, paid property tax of $6,487, paid $6,846 in mortgage interest, and had $8,147 in charitable contributions. The exemption amount for this year is $4,000. Use the table below to calculate their tax. If Juan’s W-2 showed Federal Tax Withheld of $11,799, will he be receiving a refund or owe more taxes on April 15? How much?

Page 15

Name:

Class:

Date:

Chapter 06 - Income Taxes

ANSWER:

Since Juan had more withheld from his paycheck than the taxes due, he will get a refund of $3,182.50. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 16

Name:

Class:

Date:

Chapter 06 - Income Taxes DATE CREATED: 2/1/2017 7:07 AM DATE MODIFIED: 2/16/2017 4:10 AM 33. Tanika is filing single and has a taxable income of $110,000. It took many hours throughout the year to keep records of deductions and to file her taxes at the end of the year. Use the table below to calculate her taxes. If an effective tax rate is the percentage of gross income paid in federal taxes, what is Tanika’s effective tax rate?

ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 7:42 AM DATE MODIFIED: 2/16/2017 4:30 AM 34. Jason and Lina are trying to decide whether they should get married in December or January. They have heard that there is a marriage penalty built into the federal tax system. If Jason has taxable income of $150,000 and Lina has taxable Copyright Cengage Learning. Powered by Cognero.

Page 17

Name:

Class:

Date:

Chapter 06 - Income Taxes income of $90,000, determine whether they should file as single and get married in January, or move the wedding up to December so that they can file jointly.

Page 18

Name:

Class:

Date:

Chapter 06 - Income Taxes

Page 19

Name:

Class:

Date:

Chapter 06 - Income Taxes 35. The tax equation for income over $74,900 but not over $151,200 is y = 10,312.50 + 0.25(x − 74,900). Simplify the equation and explain the numerical significance of the slope and the y-intercept. ANSWER:

The y-intercept is the amount of earning that this person does not have to pay taxes on. The tax burden will be 25 percent of all earnings over $8,412.50. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 7:54 AM DATE MODIFIED: 2/16/2017 4:23 AM 36. Benjamin started a new job and wants to verify that his net pay has been computed correctly. His salary is $67,679.04 per year. Ben is paid semiannually and has the following deductions: Social Security tax 6.2%, Medicare tax 1.45%, federal withholding 8.4%, state withholding 2.2%, city withholding 1.5%, retirement contributions $474.15, and medical and dental insurance $72.07. What should his net pay be for this pay period? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 8:07 AM DATE MODIFIED: 2/16/2017 4:24 AM 37. Angela’s effective federal tax rate is 17%. Last year, she was able to reduce taxable income by contributing $250.00 per semi-monthly paycheck to her tax -deferred retirement account and $72.07 per semi-monthly paycheck to her flexible spending account. How much did she reduce her federal taxes by if her gross semi-monthly pay is $2,819.96? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 8:14 AM DATE MODIFIED: 2/16/2017 4:24 AM Copyright Cengage Learning. Powered by Cognero.

Page 20

Name:

Class:

Date:

Chapter 06 - Income Taxes 38. Brittany’s W-2 reported total Medicare withholding based on wages of as $117,676. She contributed $72.07 biweekly to her FSA and 10% of each paycheck to her retirement plan. She received a 1099 from her bank for interest and dividends of $2,404 and a 1099 form in the amount of $4,600 from an employer for whom she did some consulting work. What is Brittany’s adjusted gross income? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 8:20 AM DATE MODIFIED: 2/16/2017 4:25 AM 39. Cody filed as a single taxpayer and determined his taxes to be $19,671.25 using the following tax table. What was his taxable income?

ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 8:58 AM DATE MODIFIED: 2/16/2017 4:27 AM 40. Asa is single and had taxable income last year of $40,375. At the beginning of the new year, he decided to save 12% of last year’s taxable income in a tax -deferred savings plan. His company also started a flexible spending account for medical contributions. Asa’s medical insurance is 72.07 per semi-monthly pay. How much can Asa expect to save in taxes Copyright Cengage Learning. Powered by Cognero.

Page 21

Name:

Class:

Date:

Chapter 06 - Income Taxes this year due to these changes?

ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/1/2017 9:30 AM DATE MODIFIED: 2/16/2017 4:28 AM

Page 22

Name:

Class:

Date:

Chapter 07 - Independent Living 1. A lease is a written agreement between a bank and a borrower. a. True b. False ANSWER: False RATIONALE: It is a written agreement between a landlord and a tenant. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/1/2017 10:39 AM DATE MODIFIED: 2/16/2017 4:35 AM

2. The length of a room is 21 feet. If a floor plan has a scale of

, then the length of the room on a floor

plan is 5.25 inches. a. True b. False ANSWER: True RATIONALE: 2x = 21(0.5) and x = 5.25 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/1/2017 10:41 AM DATE MODIFIED: 2/16/2017 4:37 AM 3. According to financial experts, a renter should allow no more than 25% of his or her gross income for rent. a. True b. False ANSWER: False RATIONALE: Rent should be no more than 30% of gross income. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/1/2017 10:45 AM DATE MODIFIED: 2/16/2017 4:40 AM 4. A security deposit is used by a landlord to provide protection for the tenants. a. True b. False ANSWER: False RATIONALE: It is protection for the landlord in the event that the tenant damages the property. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 07 - Independent Living DATE CREATED: 2/1/2017 10:47 AM DATE MODIFIED: 2/16/2017 4:43 AM 5. Front-end ratio is the ratio of monthly housing expenses to all expenses. a. True b. False ANSWER: False RATIONALE: It is the ratio of monthly expenses to monthly gross income. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/1/2017 10:49 AM DATE MODIFIED: 2/16/2017 4:46 AM 6. Aja made a 20% down payment on a house and was approved for a $185,000 mortgage. Therefore, she should expect her closing costs to be about $3,700 to $12,950. a. True b. False ANSWER: True RATIONALE: 185,000 × 0.02 = 3,700 and 185,000 × 0.07 = 12,950. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/1/2017 10:51 AM DATE MODIFIED: 2/16/2017 4:47 AM 7. Nathan’s bedroom has a width of 13 feet, a height of 9 feet, and a length of 14 feet. The level of insulation, i, is 10 and the exposure, e, is 18 because the outside wall faces south. For this room, Nathan should purchase an air conditioner with a BTU rating of about 5,000 BTUs. a. True b. False ANSWER: True RATIONALE: BTU rating = (while) ÷ 60 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/1/2017 10:52 AM DATE MODIFIED: 2/16/2017 4:50 AM 8. The Jacksons sublet their summer cottage during the winter and spring months. For each month they receive 72% of their monthly mortgage of $1,750. The Jacksons earn $1,260 for the six-month period. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 07 - Independent Living RATIONALE: The amount should be $1,260 times 6 or $7,560. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/1/2017 11:19 AM DATE MODIFIED: 2/16/2017 4:51 AM 9. Apple-Gate apartment complex uses the line graph of an exponential regression equation to model their rent increases over the past 5 years as compared to other complexes in the neighborhood. The Apple-Gate rent increases are less than other complexes in the area; therefore the slope of their graph should be steeper. a. True b. False ANSWER: False RATIONALE: A steeper slope implies a greater increase over time, so the line of the Apple-Gate graph should not be as steep as the other apartment complexes. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/2/2017 1:45 AM DATE MODIFIED: 2/16/2017 4:52 AM 10. How is a condominium different than a single-family dwelling? a. Occupants pay rent to the landlord who owns the property. b. Occupants are investors who own shares in the entire property and not individual units. c. Occupants individually own both the home and the land. d. Occupants jointly own the common parts of the property and individually own their own units. ANSWER: d POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 1:48 AM DATE MODIFIED: 2/16/2017 4:53 AM 11. There are 15,000 shares in Marybeth’s co-op. If Marybeth owns 2% of the cooperative corporation, how many shares does she own? a. 400 shares b. 300 shares c. 200 shares d. 100 shares ANSWER: b RATIONALE: 15,000 × 0.02 = 300 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 1:49 AM Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 07 - Independent Living DATE MODIFIED: 2/16/2017 4:54 AM 12. Natalie just rented an apartment for $900 a month. She was told that the rent will increase 5.5% each year. About how much will her rent be in 7 years? a. $1,416 b. $1,308 c. $1,286 d. $1,241 ANSWER: d RATIONALE: POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 1:51 AM DATE MODIFIED: 2/16/2017 4:57 AM 13. The McQuires pay a monthly mortgage payment of $938. They also pay a semi-annual property tax bill of $3,298 and semi-annual homeowner’s insurance of $840. The property tax and insurance are paid monthly into an escrow account to their lender. What is their monthly payment to their lender? a. $1,283.16 b. $1,518.6 c. $1,627.67 d. $1,672.66 ANSWER: c RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 1:54 AM DATE MODIFIED: 2/16/2017 5:04 AM 14. Zane received a quote to move his belongings to his new house. The estimate from the mover is $675 for 6 hours of packing and 5 hours of moving. Zane thinks he can reduce his cost by doing some of the packing and moving himself. If he does, the cost will decrease to $425 for 4 hours of packing and 3 hours of moving. If the mover charges a set hourly rate for packing and another set hourly rate for moving, what are these hourly rates? a. Packing: $50; moving: $75 b. Packing: $40; moving: $80 c. Packing: $80; moving: $40 d. Packing: $75; moving: $50 ANSWER: a Solve the following system of linear equations. RATIONALE: 675 = 6p + 5m 425 = 4p + 3m POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 2:16 AM DATE MODIFIED: 2/16/2017 5:06 AM Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 07 - Independent Living 15. What is NOT another word for renter? a. Lessee b. Boarder c. Tenant d. Landlord ANSWER: d POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 2:19 AM DATE MODIFIED: 2/16/2017 5:07 AM 16. Gretchen is refinishing her gazebo that is in the shape of a regular octagon. The length of one side is 3 feet and the apothem is 3.5 feet. What is the area that Gretchen will be refinishing? a. 10.5 sq feet b. 24 sq feet c. 42 sq feet d. 63 sq feet ANSWER: c RATIONALE: POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 2:20 AM DATE MODIFIED: 2/16/2017 5:09 AM 17. Kate and Ashton have been approved for a $200,000 15-year mortgage with an APR of 5.5%. How much of their first monthly payment will go to interest? a. $1,634.17 b. $1,147.57 c. $916.67 d. $717.50 ANSWER: c RATIONALE: POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 2:22 AM DATE MODIFIED: 2/16/2017 5:11 AM 18. Row 6 of the spreadsheet below will contain the formulas to generate an amortization table. What formula will be entered into D6? A B C D E F 1 Principal 175,000 2 Interest Rate as a Percent 6.2 3 Length of Loan 30 4 Number of Yearly Payments 12 5 Payment Number Beginning Monthly Towards Towards Ending Copyright Cengage Learning. Powered by Cognero.

Page 5

Name:

Class:

Date:

Chapter 07 - Independent Living Balance

Payment

Interest

Principal

Balance

6 a. =B6*B2/1200 b. =B6–E6 c. =(B1*(B2/1200)*(1+B2/1200)^(B4*B3))/(1+b\B2/1200)^(B4*B3)–1) d. B1 ANSWER: a RATIONALE: Interest is calculated by multiplying the balance times the interest rate divided by 1,200. The 1,200 represents the decimal percent divided by 12 months. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 2:25 AM DATE MODIFIED: 2/16/2017 5:13 AM 19. Angela has a monthly gross income of $3,000 and her expenses are $1,200. What is her back-end ratio? a. 25% b. 30% c. 40% d. 45% ANSWER: c RATIONALE: 1,200 ÷ 3,000 = 0.4 or 40% POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/2/2017 2:26 AM DATE MODIFIED: 2/16/2017 5:14 AM 20. Jamal has been approved for a $125,000, 30-year mortgage with an APR of 5.3%. He made a 10% down payment and is closing on April 5th. How much should he expect to pay in prepaid interest at closing? 125,000 × 0.9 = 112,500 × 0.053 = 5,962.50 ÷ 365 = 16.34 × 25 = $408.50 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 2:30 AM DATE MODIFIED: 2/16/2017 5:14 AM 21. Ben and Jane have been approved for a $220,000, 30-year mortgage with an APR of 5.82%. What will be their total interest for the 30 years? 1,293.66 × 360 = 465,717.60 – 220,000 = $245,717.60 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 2:31 AM DATE MODIFIED: 2/16/2017 5:15 AM 22. What is an ARM? An ARM is an adjustable rate mortgage. In an ARM, the interest rate and monthly payment change ANSWER: Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 07 - Independent Living periodically. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 2:34 AM DATE MODIFIED: 2/16/2017 5:15 AM 23. Nancy is buying a house and made a list of her expenses: mortgage payments, utilities, closing costs, prepaid interest, origination fee, and insurance payments. Separate each of the six expenses as either a recurring or a non-recurring cost. Recurring costs: mortgage payments, utilities, insurance payments ANSWER: Non-recurring costs: closing costs, prepaid interest, origination fee POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 2:34 AM DATE MODIFIED: 2/16/2017 5:16 AM 24. Casey has a backyard that is a 50-by-50-foot square. She turned over an irregularly-shaped plot of soil to plant a garden. To find the area of the garden, 1,500 random points are generated and 420 of the points land inside the irregularlyshaped garden. What is the area of the garden? 700 sq feet; ANSWER: 420/1,500 = x/2,500 = 1,050,000 = 1,500x; x = 700 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 4:52 AM DATE MODIFIED: 2/16/2017 5:20 AM 25. When Mary and Jack bought their house, their property taxes were $3,630 annually. After 8 years, their property taxes are now $4,065.60. What percent increase is this? 12% ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 4:53 AM DATE MODIFIED: 2/16/2017 5:26 AM 26. Nina owns a condominium where she paid $2,340 in maintenance fees this year. If her property taxes are 18% of this amount, how much did Nina pay in property taxes? $421.20 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 4:53 AM Copyright Cengage Learning. Powered by Cognero.

Page 7

Name:

Class:

Date:

Chapter 07 - Independent Living DATE MODIFIED: 2/16/2017 5:27 AM 27. What type of spreadsheet or table shows an accounting of the unpaid principal, monthly payment, amount allocated toward principal, and the amount allocated towards interest for a mortgage? An amortization table ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 4:54 AM DATE MODIFIED: 2/16/2017 5:27 AM 28. Garrett and Erin are borrowing $170,000 to purchase a new home. They have been approved for a 30-year loan with an interest rate of 5.75%. What will be their monthly payment? ANSWER: $992.07; use the monthly payment formula;

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 4:55 AM DATE MODIFIED: 2/16/2017 5:28 AM 29. Name four types of fees you may incur during the closing on the purchase of a new home. Sample answers: earnest money deposit, attorney fees, origination fee, title search, points, prepaid ANSWER: interest, transfer tax POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 4:59 AM DATE MODIFIED: 2/16/2017 5:29 AM 30. Craig and Tammy recently sold their home for $225,000. Their loan balance is $135,680. What is their equity before paying seller’s expenses? $89,320 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 5:00 AM DATE MODIFIED: 2/16/2017 5:30 AM 31. Erica is considering moving into a one-bedroom apartment in Hyde Park. The apartment has a rent of $880 and has the following fees. - Application fee: 5% of one month’s rent Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 07 - Independent Living - Credit application fee: $15 - Security deposit: 1 month’s rent - Lease protection: the last month’s rent - Broker’s fee: 9% of one year’s rent - First month’s rent How much is Erica expected to pay up front in order to move into this apartment? ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 5:08 AM DATE MODIFIED: 2/16/2017 5:31 AM 32. The square footage and monthly rental of 10 similar one-bedroom apartments yield the linear regression y = 0.704x + 985.83 where x represents the square footage of the apartment and y represents the monthly rental price. Grace can afford $1,700 per month for rent. What size apartment should she be able to rent for that price? ANSWER:

Grace should expect to find an apartment that is 1,014 square feet. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 5:12 AM DATE MODIFIED: 2/16/2017 5:32 AM 33. A rectangular room measures 21 feet by 28 feet with a 10 -foot -high ceiling. The flooring is being replaced with carpeting that sells for $10.45 per square foot and entails a $149 installation fee. What is the total pricing for the carpeting with an 8.0% sales tax? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 6:09 AM DATE MODIFIED: 2/16/2017 5:32 AM 34. A rectangular room measures 14 feet by 17 feet with a 9 -foot -high ceiling. The room is being painted. Each wall will be painted with two coats and the ceiling will be painted with one coat. Each gallon of paint covers 350 square feet and costs $28. What is the total price for paint with an 8.5% sales tax?

Page 9

Name:

Class:

Date:

Chapter 07 - Independent Living ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 6:13 AM DATE MODIFIED: 2/16/2017 5:33 AM 35. Trystan and Kendall have decided to buy a new home that costs $300,000. They want to make a 20% down payment and finance the rest. Their bank has offered an opportunity to buy down the quoted interest rate of 4.75% by 0.125% per point purchased. Each point will cost 1% of the amount borrowed. Trystan and Kendall were hoping the interest rate was no more than 4.5% What will it cost to buy down the quoted interest rate to 4.5%? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 6:18 AM DATE MODIFIED: 2/16/2017 5:34 AM 36. James and Amy have decided to buy a new home that costs $240,000. They want to make a 20% down payment and finance the rest over 30 years. Their bank has offered an opportunity to buy down the quoted interest rate of 3.75% by 0.125% per point purchased. Each point will cost 1% of the amount borrowed. James and Amy were hoping the interest rate was no more than 3.375%. How long will it take for the cost of the points to be recovered by the savings in the monthly mortgage payment?

Page 10

Name:

Class:

Date:

Chapter 07 - Independent Living ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 6:22 AM DATE MODIFIED: 2/16/2017 5:38 AM 37. Marcus is setting the corner supports for a new deck that measures 15 feet by 20 feet. To ensure that his deck is a perfect rectangle, he measures the diagonals to make sure they are the same. What length should these diagonals be? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/2/2017 6:29 AM DATE MODIFIED: 2/16/2017 5:39 AM 38. Matt just got a great deal on a 5,000 BTU air conditioner and decided to add a family room with an 8-foot ceiling to the back of his house. If the room faces north and he intends to make sure it is well insulated, how many square feet can his room be without exceeding the capacity of the air conditioner? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/3/2017 7:37 AM DATE MODIFIED: 2/16/2017 5:39 AM Copyright Cengage Learning. Powered by Cognero.

Page 11

Name:

Class:

Date:

Chapter 07 - Independent Living 39. The Bradys have a gross annual income of $175,000 and have been pre-approved for a 30-year mortgage loan at 3.375% as long as the back-end ratio does not exceed 36% The house they want to buy costs $360,000, and they plan to make a down payment of 20%. Their research shows that the semi-annual property taxes for this house are $3,450. They have been given a quote from their insurance company of a $1,290 annual premium. The Bradys currently have a $579 monthly car payment and their monthly credit card bills average $2,100. Will the bank agree to finance the Bradys’ dream home? ANSWER:

Yes, the bank will finance the Bradys’ dream home. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/3/2017 7:47 AM DATE MODIFIED: 2/16/2017 5:41 AM

Page 12

Name:

Class:

Date:

Chapter 08 - The Stock Market 1. In a reverse stock split, the number of outstanding shares is reduced while the market price per share stays the same. a. True b. False ANSWER: False RATIONALE: In a reverse stock split, the number of outstanding shares is reduced while the market price per share is increased. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/3/2017 9:15 AM DATE MODIFIED: 2/9/2017 9:43 AM 2. Comanche Ltd closed at $15.89, a $0.43 decrease from the closing price the day before. This is a 2.6% decrease. a. True b. False ANSWER: True RATIONALE: 2.6% decrease; 0.43 ÷ 16.32 0.02634 × 100 = 2.6% POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/3/2017 9:17 AM DATE MODIFIED: 2/9/2017 9:46 AM 3. A crossover occurs when one moving average crosses over another. Investors should consider buying if a fast-moving average crosses over a slow-moving average and should consider selling if a fast-moving average crosses below a slowmoving average. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/3/2017 9:38 AM DATE MODIFIED: 2/16/2017 6:22 AM 4. When there is a fractional part of a share, the company will buy the fractional share at current prices, because fractional shares are not traded. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 08 - The Stock Market DATE CREATED: 2/3/2017 9:39 AM DATE MODIFIED: 2/9/2017 9:54 AM 5. Vito owned 120 shares of a stock before the corporation instituted a 5-for-3 split. Before the split, the stock was selling at $16 a share. Vito now has 200 shares of the stock that is worth about $26.67 each. a. True b. False ANSWER: False RATIONALE: Post-split number of shares: ; post-split price: POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False OTHER: DATE CREATED: 2/3/2017 9:40 AM DATE MODIFIED: 2/16/2017 6:23 AM 6. Xavier bought 4,000 shares of XYZ stock at $17.37 per share. This price was down $1.12 from the previous day’s closing price. The ticker for this transaction will appear as XYZ 4K@ 17.37  1.12. a. True b. False ANSWER: False The arrow should be pointing downward:▼. RATIONALE: POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/3/2017 10:06 AM DATE MODIFIED: 2/16/2017 6:23 AM 7. One share of Kimco’s common stock pays an annual dividend of $1.43. Today, Kimco closed at $19.09 with a net change of +0.72. The stock yield at yesterday’s closing price is about 8%. a. True b. False ANSWER: True RATIONALE: POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/3/2017 10:09 AM DATE MODIFIED: 2/16/2017 6:24 AM 8. Rebecca correctly calculated the 3-day SMA of these stock prices $11, $14, $13, $11, and $12 as $12.67, $12.67, and $12.00. Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 08 - The Stock Market a. True b. False ANSWER: RATIONALE:

True

POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/3/2017 10:12 AM DATE MODIFIED: 2/9/2017 10:23 AM 9. Leon purchased 8,500 shares of stock at a price of $11.45 a share. He sold the stock 6 years later at a price of $19.78 per share. His capital gain is about 58%. a. True b. False ANSWER: False RATIONALE: POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/4/2017 6:48 AM DATE MODIFIED: 2/16/2017 6:29 AM 10. Roxanne placed a limit order. This means she specified the price that she would pay for a stock. If the stock does not fall to that price, then the stocks are not purchased. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/4/2017 6:51 AM DATE MODIFIED: 2/16/2017 6:29 AM 11. The stock bar chart below shows price and volume information for Medco Health Solutions (MHS) on January 12. What was the opening price?

Page 3

Name:

Class:

Date:

Chapter 08 - The Stock Market

a. $40.92 c. $41.14

b. $41.60 d. $40.92

Page 4

Name:

Class:

Date:

Chapter 08 - The Stock Market 12. A candlestick chart is a type of stockbar chart. The real body is displayed in different colors to indicate the action for that day. What does it mean if the real body is red? a. The stock closed higher than the opening price. b. The stock closed at the opening price. c. The stock opened higher than the closing price. d. The stock closed lower than the opening price. ANSWER: d POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 10:28 AM DATE MODIFIED: 2/9/2017 10:28 AM 13. On July 3, the ABC Corporation closed at $43.67. This was a $0.47 increase from the close the day before. What percent change is this? a. +98.91% b. –1.09% c. +1.09% d. –1.07% ANSWER: c RATIONALE: 0.47 ÷ 43.20 ≈ 0.0109 × 100 = 1.09% POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 10:29 AM DATE MODIFIED: 2/9/2017 10:36 AM 14. Eleanor purchased $2,568 worth of stock and paid her broker a 0.5% fee. She sold the stock when the stock price increased to $3,298 using an online broker that charged $7 per trade. What are her net proceeds? a. $710.16 b. $735.84 c. $755.68 d. $851.40 ANSWER: a RATIONALE: 2,568 × 0.005 = 12.84; 2,568 + 12.84 = 2,580.84; 3,298 – 7 = 3,291; 3,291 – 2,580.84 = 710.16 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 10:36 AM DATE MODIFIED: 2/9/2017 10:38 AM 15. Marcy owns common stock in Rex’s Pet Planet. The annual dividend is $2.05. The current price is $5.37. What is the yield of the stock? a. 31.7% b. 33.2% c. 38.2% d. 53.7% ANSWER: c Copyright Cengage Learning. Powered by Cognero.

Page 5

Name:

Class:

Date:

Chapter 08 - The Stock Market RATIONALE: 2.05 ÷ 5.37 ≈ 0.38175 × 100 = 38.2% POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 10:59 AM DATE MODIFIED: 2/9/2017 11:01 AM 16. Sunni bought a $500 corporate bond. The bond pays 4.8% interest per year. If Sunni holds the bond for 15 years, how much will Sunni receive in interest? a. $480 b. $360 c. $140 d. $24 ANSWER: b RATIONALE: 500 × 0.048 × 15 = 360 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 11:01 AM DATE MODIFIED: 2/9/2017 11:13 AM 17. A stock that was selling for $48 a share split 2-for-1. Before the split, the company had 3.4 million shares of stock outstanding. What is the post-split number of shares outstanding? a. 10.2 million b. 6.8 million c. 2.4 million d. 1.7 million ANSWER: b RATIONALE: 3.4 million × 2 = 6.8 million POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 11:07 AM DATE MODIFIED: 2/9/2017 11:09 AM 18. Which is NOT personally liable for any losses or damages? a. Owner of a sole proprietorship b. Shareholders in a pubic corporation c. Partners in a partnership d. Shareholders in a corporation ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 11:11 AM DATE MODIFIED: 2/9/2017 11:12 AM 19. Steve and Elizabeth decide to become partners in a children’s cooking school. They need $80,000 for the franchise. They invest in a 3:4 ratio, respectively. About what percent of the business is owned by Elizabeth? a. 34% b. 43% Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 08 - The Stock Market c. 57% d. 80% ANSWER: c RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 11:13 AM DATE MODIFIED: 2/9/2017 11:20 AM 20. What is the 4-day SMA for the following closing prices: $56, $61, $50, $57, $60, $58, and $57. a. $56, $61, $50, $57 b. $56, $57, $56.25 c. $56, $57, $56.25, $58 d. $58, $56, $56.25, $57 ANSWER: c RATIONALE: POINTS: 1 QUESTION TYPE:Multiple Choice HAS VARIABLES: False DATE CREATED: 2/9/2017 11:19 AM DATE MODIFIED: 2/9/2017 11:20 AM

21. Renee made a spreadsheet to calculate the 5-day SMA for the stocks in her portfolio. What formula should Renee put into C7?

Page 7

Name:

Class:

Date:

Chapter 08 - The Stock Market

Page 8

Name:

Class:

Date:

Chapter 08 - The Stock Market 22. What does the ticker P&G 3M@ 77.85  0.13 mean? Three million shares of P&G stock were traded at $77.85 per share, which is up $0.13 from the ANSWER: previous closing price. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:08 PM DATE MODIFIED: 2/9/2017 12:08 PM 23. McKenzie buys 250 shares of stock for $12 a share and pays a 2% commission. She sells the stock 3 years later for $18 a share and pays a 1% commission. What are her net proceeds? 1,395.00; 250 × 12 = 3,000 × 0.02 = 60; 3,000 + 60 = 3,060; ANSWER: 250 × 18 = 4,500 × 0.01 = 45; 4,500 – 45 – 3,060 = 1,395.00 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:08 PM DATE MODIFIED: 2/9/2017 12:09 PM 24. Quinton bought x number of shares for p dollars and paid a 1% commission. He sold the stock for y dollars and paid a flat fee of $7. Express Quinton’s net proceeds algebraically. y – (0.01xp + 7) ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:09 PM DATE MODIFIED: 2/9/2017 12:10 PM 25. Katelyn owns 140 shares of a stock that sells for $39 a share before a 3-for-2 split is announced. After the split, how many shares of the stock will Katelyn own and what will they be worth? She owns 210 shares worth $26 each. ANSWER: Post-split number of shares:

Post-split price:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:10 PM DATE MODIFIED: 2/16/2017 6:17 AM 26. Mrs. Thomas owns 1,500 shares of a corporation that pays a quarterly dividend of $0.36 a share. How much in dividends did she receive last year? $2,160; ANSWER: Copyright Cengage Learning. Powered by Cognero.

Page 9

Name:

Class:

Date:

Chapter 08 - The Stock Market POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:13 PM DATE MODIFIED: 2/9/2017 12:15 PM 27. This information was posted at the end of the trading day on June 12. 52-week 52-week Stock Last Change High Low 64.89 50.34 ABC Inc 58.19 –2.03 212.65 189.40 XYZ Corp 207.21 –17.54 145.90 113.38 CAT Ltd 144.68 +8.92 What was the closing price of CAT Ltd on June 11? $135.76 ANSWER:

Sales of 100s 23.9 1.6 38.2

High

Low

60.18 210.16 132.75

54.42 197.34 127.89

The last price of $144.68 is an $8.92 increase from the day before, June 11. Subtract to find the closing price for June 11. 144.68 – 8.92 = 135.76 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:15 PM DATE MODIFIED: 2/16/2017 6:18 AM 28. A certain corporation listed its sales in 100s as 1,700. What was their actual volume in thousands? 1,700 × 100 = 170,000 ÷ 1,000 = 170 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:20 PM DATE MODIFIED: 2/9/2017 12:21 PM 29. The information released on a particular corporation at closing shows a chg of –2.35. What does this mean? Chg or net change shows the change between the previous day’s closing price and the current day’s ANSWER: closing price. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:22 PM DATE MODIFIED: 2/9/2017 12:23 PM 30. The stock bar chart shows the market action for Dell during the week of May 4. What was the day’s close on May 8?

Page 10

Name:

Class:

Date:

Chapter 08 - The Stock Market

$10.90 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:23 PM DATE MODIFIED: 2/16/2017 6:20 AM 31. Three friends are starting a food truck and are contributing a total of $140,000 to begin operations. Their investments are in the ratio of 3:4:7. What is the difference in investment between the smallest investor and the largest investor? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer Copyright Cengage Learning. Powered by Cognero.

Page 11

Name:

Class:

Date:

Chapter 08 - The Stock Market HAS VARIABLES: False DATE CREATED: 2/9/2017 12:24 PM DATE MODIFIED: 2/9/2017 12:26 PM 32. Three friends are starting a new exercise equipment franchise. Their investments are in the ratio of 5:7:11. The smallest investor is contributing $75,000. What is the largest investor contributing? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:27 PM DATE MODIFIED: 2/9/2017 12:30 PM 33. ABC Company has declared dividends totaling $475,000. There are 38,000 shares of preferred stock that earn dividends of $2.50 per share. If there are 240,000 shares of common stock, how much per share does a common stockholder receive? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:31 PM DATE MODIFIED: 2/9/2017 12:33 PM 34. Chantel purchased $292,565.00 worth of stock and paid her broker a 1% broker fee. She sold the stock when it increased to $436,527.00 three years later and used a discount broker that charged $140 per trade. Determine Chantel’s net proceeds after all broker fees were paid. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 12:55 PM DATE MODIFIED: 2/9/2017 1:00 PM 35. Mason purchased Texas Instruments for $45.23 per share and plans to sell the shares when the stock price rises 25%. If Texas Instruments is currently selling for $52.00, what percent increase does Mason need to issue the sell order? Copyright Cengage Learning. Powered by Cognero.

Page 12

Name:

Class:

Date:

Chapter 08 - The Stock Market ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 1:08 PM DATE MODIFIED: 2/9/2017 1:10 PM 36. Of the shareholders in a service corporation, 56% are women. If 72,820 shareholders are men, how many shareholders are women? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 1:11 PM DATE MODIFIED: 2/9/2017 1:59 PM 37. Justin owned 1,500 shares of Schwinn Corporation and received a quarterly dividend check for $618.75. What was the annual dividend for one share of Schwinn? ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 2:10 PM DATE MODIFIED: 2/9/2017 2:11 PM 38. Jill owns 900 shares of a corporation that pays an annual dividend of $1.82 per share. How much should she expect to receive on a quarterly dividend check? ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 2:12 PM DATE MODIFIED: 2/9/2017 2:12 PM 39. At the end of the trading day on June 5, Traders, Inc. announced that its CEO had a heart attack. This news caused the stock to drop to $48.62, a drop 6.75%. If Steve had 1,000 shares of Traders, Inc., in his portfolio, what was the value of his portfolio before the announcement?

Page 13

Name:

Class:

Date:

Chapter 08 - The Stock Market ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 2:13 PM DATE MODIFIED: 2/9/2017 2:15 PM 40. Yesterday’s dividend yield at Hewlett Packard was 1.49%. If HP’s annual dividend is $0.44 and its closing stock price today was up 7.25%, what is Hewlett Packard’s dividend yield today? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 2:16 PM DATE MODIFIED: 2/9/2017 2:19 PM

Page 14

Name:

Class:

Date:

Chapter 09 - Modeling a Business 1. Where the graphs of supply and demand functions intersect, the market is in equilibrium. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 6:44 PM DATE MODIFIED: 2/9/2017 7:01 PM 2. Jeff prepares meals in the home of his customers. His fixed cost for transportation and supplies is $14.50. The labor and groceries needed for each family meal is $8.80, so the expense function is E = 5.7q + 8.8. a. True b. False ANSWER: False The expense function is E = 8.8q + 14.5. RATIONALE: POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:01 PM DATE MODIFIED: 2/9/2017 7:02 PM 3. The dashed line represents the expense function, and the solid line represents the revenue function.

Page 1

Name:

Class:

Date:

Chapter 09 - Modeling a Business

a. True b. False ANSWER: False RATIONALE: The dashed line is the revenue function, and the solid line is the expense function. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:03 PM DATE MODIFIED: 2/14/2017 7:18 AM 4. A trademark claims ownership of the idea for an invention. a. True b. False ANSWER: False RATIONALE: A patent with the government claims ownership of the idea of an invention. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:04 PM DATE MODIFIED: 2/9/2017 7:05 PM Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 09 - Modeling a Business 5. A company manufactures and sells cutting boards for $7 wholesale and recommends a markup of $2.70 for a selling price of $4.30. a. True b. False ANSWER: False RATIONALE: The selling price is 7 + 2.70 = $9.70 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:05 PM DATE MODIFIED: 2/9/2017 7:13 PM 6. If you were doing a study, your class, sports team, neighborhood, or community center could be considered convenience samples. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:08 PM DATE MODIFIED: 2/9/2017 7:14 PM 7. There are 12,650 ways a teacher can group 4 students in a class that has 25 students. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:08 PM DATE MODIFIED: 2/9/2017 7:14 PM 8. The Cacti Company manufactures and sells succulent gardens. The gardens have an expense equation of E = 4.7q + 34,000. The average cost per garden is $12.50 when 2,500 are produced. a. True b. False ANSWER: False The average cost is E = 4.7(2,500) + 34,000 = 45,750 ÷ 2,500 = $18.30. RATIONALE: POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:10 PM Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 09 - Modeling a Business DATE MODIFIED: 2/9/2017 7:11 PM 9. The price that a manufacturer charges a retailer for an item is the wholesale price. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:11 PM DATE MODIFIED: 2/9/2017 7:12 PM 10. The costs for postage and packaging are examples of fixed expenses. a. True b. False ANSWER: False RATIONALE: Postage and packaging are items that depend on the number of widgets produced, so they are variable and not fixed. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/9/2017 7:12 PM DATE MODIFIED: 2/9/2017 7:12 PM 11. Marsha used a graphing calculator to graph an expense and a revenue function for her family’s printing business. The graph looked like the one below. What are the approximate breakeven points?

Page 4

Name:

Class:

Date:

Chapter 09 - Modeling a Business

a. 75,000 and 38,000 b. 120,000 and 52 c. 15 and 47 d. 8 and 52 ANSWER: c RATIONALE: The two breakeven points are the x-values where the two lines intersect. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 7:19 AM DATE MODIFIED: 2/14/2017 9:26 PM 12. Examine the graph below. At what price is the maximum profit?

Page 5

Name:

Class:

Date:

Chapter 09 - Modeling a Business

a. $24 c. $27,000 ANSWER: RATIONALE:

b. $48 d. $62,000 a Maximum profit occurs at the price where the distance between the revenue and expense curve is the greatest. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 7:23 AM DATE MODIFIED: 2/14/2017 9:25 PM 13. The zeros of a quadratic function can be found by which of the following methods? a. Factoring b. Quadratic formula c. Completing the square d. All of the answer choices are correct. ANSWER: d RATIONALE: All three of these methods may be used to find the zeros of a quadratic function. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 7:25 AM DATE MODIFIED: 2/14/2017 7:27 AM Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 09 - Modeling a Business 14. The graph shows the supply and demand curves for a Cajun spice mix that Leroy manufactures in a home business. What will happen if Leroy sets the price at $3.99?

a. The supply will exceed the demand. b. The demand will exceed the supply. c. The market will be in equilibrium. d. Five hundred spice mixes will be demanded. ANSWER: b RATIONALE: At $3.99 the demand is for 1,000 but only 500 are supplied. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 9:30 PM DATE MODIFIED: 2/14/2017 11:03 PM 15. A new company manufactures tennis rackets. The fixed expenses are $78,490, and the variable expenses are $14 per racket produced. What is the expense of producing 3,500 rackets? a. $49,000 b. $81,990 c. $127,490 d. $147,900 ANSWER: c RATIONALE: E = 14(3,500) + 78,490 = $127,490 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 9:33 PM DATE MODIFIED: 2/14/2017 9:36 PM 16. A demand function for step stools manufactured by U-Step is q = –720p + 20,500. What is the revenue if the price per step stool is $18? a. $369,000 b. $135,720 c. $28,040 d. $7,540 ANSWER: b Copyright Cengage Learning. Powered by Cognero.

Page 7

Name:

Class:

Date:

Chapter 09 - Modeling a Business Write the revenue function as R = –720p2 + 20,500p and substitute $18 for p. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 9:37 PM DATE MODIFIED: 2/14/2017 9:39 PM RATIONALE:

17. In the revenue equation R = –360p2 + 28,800p, what is the highest price that should be set that leads to a revenue of $540,000? a. $30.00 b. $1,500.00 c. $80.00 d. $50.00 ANSWER: a RATIONALE: Set R = 540,000; subtract 540,000 from both sides of the equation and factor out –360. The resulting equation of 0 = p2 – 80p + 1,500 can be factored to 0 = (p – 30)(p – 50) POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 9:39 PM DATE MODIFIED: 2/14/2017 9:44 PM 18. In the revenue equation R = –360p2 + 28,800p, what is the price that should be set that leads to the maximum revenue? a. $50 b. $30 c. $80 d. $40 ANSWER: d RATIONALE: Find where the vertex occurs using –b/2a or –28800/(2 × –360). POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 9:45 PM DATE MODIFIED: 2/14/2017 9:49 PM 19. A company that produces lawn chairs uses market surveys and linear regression to develop a demand function based on the wholesale price. The demand function is q = –110p + 7,500. At a price of $45, how many lawn chairs are demanded? a. 1,750 b. 2,550 c. 4,950 d. 12,450 ANSWER: b RATIONALE: 2,550; q = –110(45) + 7,500 = 2,550 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 9:50 PM DATE MODIFIED: 2/14/2017 9:53 PM Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 09 - Modeling a Business 20. In the revenue equation R = –360p2 + 28,800p, what is the maximum revenue that can be expected? a. $1,728,000 b. $576,000 c. $540,000 d. $518,400 ANSWER: b RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/14/2017 9:53 PM DATE MODIFIED: 2/14/2017 9:59 PM 21. What is it called when the expenses and the revenue are equal, so there is no profit or loss? Breakeven point ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 10:51 PM DATE MODIFIED: 2/14/2017 10:51 PM 22. A company makes flower pots. The flower pots have an expense equation of E = 2.75q + $24,582. What is the fixed cost in the expense function? $24,582 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 10:53 PM DATE MODIFIED: 2/14/2017 10:54 PM 23. When does undercoverage occur? Undercoverage occurs when part of the population does not have a chance to be in a sample. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 10:54 PM DATE MODIFIED: 2/14/2017 10:55 PM 24. What is a zero net difference? A zero net difference occurs when the difference between expense and revenue equals zero. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer Copyright Cengage Learning. Powered by Cognero.

Page 9

Name:

Class:

Date:

Chapter 09 - Modeling a Business HAS VARIABLES: False DATE CREATED: 2/14/2017 10:55 PM DATE MODIFIED: 2/14/2017 10:56 PM 25. A startup company selling cell phone cases noticed the following trend in the demand for its product. Find the equation of the demand function. Price Quantity 25 30 35 40 45 ANSWER:

5,000 4,724 4,448 4,172 3,896

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 10:56 PM DATE MODIFIED: 2/24/2017 3:29 PM 26. The graph shows the supply and demand for a widget. What happens if the price is set at $25?

ANSWER: POINTS:

Because the price is more than the equilibrium price, supply will exceed demand and suppliers will try to sell their excess supply at a lower price. 1

Page 10

Name:

Class:

Date:

Chapter 09 - Modeling a Business QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:01 PM DATE MODIFIED: 2/14/2017 11:02 PM 27. Toby’s Tiny Toys have an expense equation of E = 12.45q + 53,900. Toby’s sell its toys for $16.50 each, and its revenue equation is R = 16.5q. How many tiny toys does it have to sell to reach its breakeven point? 12.45q + 53,900 = 16.5q ANSWER: 53,900 = 4.05q; q = 13,309 POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:05 PM DATE MODIFIED: 2/14/2017 11:08 PM 28. AAA Dance Shoes makes dancing shoes with leather soles. The shoes cost $29 to manufacturer. The fixed cost for the product line is $45,000. The company has determined their demand function to be q = –200p + 30,000, where p is the price for each pair of shoes. Write the expense and revenue functions in terms of price. ANSWER: E = –5,800p + 915,000; R = –200p2 + 30,000p E = 29q + 45,000 E = 29(–200p + 30,000) + 45,000 E = –5,800p + 915,000 R = pq = p(–200p + 30,000) R = –200p2 + 30,000p POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:06 PM DATE MODIFIED: 2/14/2017 11:08 PM 29. In what shape is the graph of a revenue function? Downward-facing parabola ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:08 PM DATE MODIFIED: 2/14/2017 11:09 PM 30. A new Google cell phone has a markup of 175% and sells for $650.00. What is the wholesale price of the cell phone? ANSWER:

Page 11

Name:

Class:

Date:

Chapter 09 - Modeling a Business POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:09 PM DATE MODIFIED: 2/14/2017 11:12 PM 31. A market research firm was looking to form 45 different pairs of students from a group of students selected randomly. How many students were in that group? 10; It is impossible to have a group of -9 students. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:12 PM DATE MODIFIED: 2/14/2017 11:16 PM 32. The Sports Brand Company is making a new shoe that has a wholesale price of $60, and it wishes to advertise a retail price of $149.99. What is the markup percentage? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:17 PM DATE MODIFIED: 2/14/2017 11:20 PM 33. Custom Tees has determined that its expense and revenue functions are E = −1040p + 91,520 and R = –260p2 + 15,600p − 108,160. At which price points can the company expect to break even? $16 and $48 dollars ANSWER:

POINTS:

Page 12

Name:

Class:

Date:

Chapter 09 - Modeling a Business QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:26 PM DATE MODIFIED: 2/14/2017 11:30 PM 34. Custom Tees has determined that its variable of producing t-shirts is due to increases in the price of cotton. Their expense function was recently adjusted from E = –1040p + 91,520 to E = –900p + 91,520. If the breakeven point before the adjustment was $16, what will be the net percent change in expenses if the price is left at $16? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:31 PM DATE MODIFIED: 2/14/2017 11:35 PM 35. Custom Tees has determined that its expense and revenue functions are E = −1040p + 91,520 and R = −260p2 + 15,600p − 108,160. What is the maximum profit that this company can expect to make? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:38 PM DATE MODIFIED: 2/14/2017 11:42 PM 36. Determine the expense E for production of an item when the price of $74.99 has been established. Fixed expenses are $59,000 and each unit produced costs $42.00 to make. The demand function has been determined to be q = 67p + 74,000. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/14/2017 11:44 PM DATE MODIFIED: 2/14/2017 11:47 PM Copyright Cengage Learning. Powered by Cognero.

Page 13

Name:

Class:

Date:

Chapter 09 - Modeling a Business

Page 14

Name:

Class:

Date:

Chapter 10 - Planning for Retirement 1. Social Security benefits are need-based and are not based on your earnings over your working lifetime. a. True b. False ANSWER: False RATIONALE: Social Security benefits are based on earnings. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/14/2017 11:52 PM DATE MODIFIED: 2/14/2017 11:53 PM 2. Natalie’s employer uses a final-average formula to calculate pensions. This type of pension is based on a fixed percentage of the average earnings of the employee’s last several years. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/14/2017 11:54 PM DATE MODIFIED: 2/14/2017 11:54 PM 3. Nancy bought a 20-year term life insurance policy with a face value of $200,000. Her monthly premium is $66. She dies after 2 years. Her beneficiaries will receive $200,000 ÷ 2 or $100,000. a. True b. False ANSWER: False RATIONALE: Her beneficiaries will receive $200,000. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/15/2017 12:22 AM DATE MODIFIED: 2/15/2017 12:23 AM 4. A Roth IRA is tax-deferred, so taxes are deferred until the money is withdrawn from the account. a. True b. False ANSWER: False RATIONALE: A Roth IRA is not tax-deferred and the money withdrawn from the account at retirement is tax-exempt. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 1

Name:

Class:

Date:

Chapter 10 - Planning for Retirement DATE CREATED: 2/15/2017 12:24 AM DATE MODIFIED: 2/15/2017 12:24 AM 5. Tyrone has an annual salary of $48,000. His employer offers a 401k plan; the company matches 25% of Tyrone’s 401k contributions up to 5% of his salary. The maximum allowable contribution to any 401k is $16,500. To maximize his employer’s contribution, Tyrone should deposit $200 a month into his account and his employer will deposit $50. a. True b. False ANSWER: True RATIONALE: 48,000 × 0.05 = 2,400 ÷ 12 = 200; 200 × 0.25 = $50. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/15/2017 12:25 AM DATE MODIFIED: 2/15/2017 12:27 AM 6. Lauri worked full-time at a health club last year earning $23,000. Last year, $1,090 in earnings was needed for one Social Security credit. Lauri earned 4 credits for the year. a. True b. False ANSWER: True RATIONALE: A maximum of 4 credits is allowed per year. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/15/2017 12:27 AM DATE MODIFIED: 2/15/2017 12:28 AM 7. The mortality rate for a certain male category is 0.005657. This means there is a 56% chance of a 50-year old man dying before his next birthday. a. True b. False ANSWER: False RATIONALE: 0.005657 × 100 = 0.5657%, which is less than a 1% chance of dying. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/15/2017 12:29 AM DATE MODIFIED: 2/15/2017 12:30 AM 8. A COLA is based on the Consumer Price Index. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

Page 2

Name:

Class:

Date:

Chapter 10 - Planning for Retirement RATIONALE: COLA is a cost of living increase and CPI is the consumer price index. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/15/2017 12:30 AM DATE MODIFIED: 2/15/2017 12:30 AM 9. Cecile is 23 years old and wants to retire when she is 55. She opens up a retirement account and makes a $400 deposit each month. If the account pays 2.75% interest compounded monthly, she will have about $245,842.67 in her account when she is 55. a. True b. False ANSWER: True RATIONALE: Use the formula for future value of a periodic investment. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/15/2017 12:31 AM DATE MODIFIED: 2/15/2017 12:31 AM 10. It is advisable to lock in a term life insurance policy rate at a young age because the cost of life insurance increases as a person ages. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/15/2017 12:32 AM DATE MODIFIED: 2/15/2017 12:32 AM 11. Mrs. Chambers is 62 years old and plans to retire. Over her life she earned an average of $2,500 per month after adjusting for inflation. The formula for calculating the full monthly Social Security benefits is 90% of the first $856 earned, then 32% of the earnings over $856. What will her monthly benefit be if her full retirement benefit is reduced by approximately 30% for retiring before the age of 67? a. $1,296.48 b. $1,096.40 c. $836.08 d. $388.94 ANSWER: c RATIONALE: $836.08; (0.9 × 856) + (0.32 × (2,500 − 856)) = 1,296.48; full retirement benefit 1,296.48 × 0.3 = 388.94; reduction amount 1,296.48 − 388.94 = $836.08 reduced benefit POINTS: 1 QUESTION TYPE: Multiple Choice Copyright Cengage Learning. Powered by Cognero.

Page 3

Name:

Class:

Date:

Chapter 10 - Planning for Retirement HAS VARIABLES: False DATE CREATED: 2/15/2017 12:35 AM DATE MODIFIED: 2/15/2017 12:39 AM 12. In 2016, the maximum taxable income for Social Security was $118,500, and the rate was 6.2%. The rate for Medicare tax was 1.45%. If Jessica’s taxable income as an attorney was $152,000 that year, how much did she pay in FICA taxes? a. $2,204 b. $9,551 c. $9,424 d. $11,628 ANSWER: b RATIONALE: $8,528; (152,000 × 0.0145) + (118,500 × 0.062) = $9,551 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 12:39 AM DATE MODIFIED: 2/15/2017 12:41 AM 13. Jack’s full Social Security retirement benefit is $1,890. He started collecting Social Security benefits at age 65, so his benefits are reduced by about 13.3%. What will his monthly benefit be? a. $1,638.63 b. $1,683.80 c. $1,784.60 d. $1,864,86 ANSWER: a RATIONALE: $1,638.63; 1,890 − (0.133 × 1,890) = $1,638.63 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 12:42 AM DATE MODIFIED: 2/15/2017 12:52 AM 14. Maria’s employer of 19 years offers a pension plan that is the product of the three -year average of her most current salaries, the number of years of service, and a 2% multiplier. Her last three salaries are: $63,500, $65,000, and $66,500. What is her annual pension benefit? a. $23,940 b. $24,700 c. $65,000 d. $247,000 ANSWER: b RATIONALE: $24,700; (63,500 + 65,000 + 66,500) ÷ 3 = 65,000; 65,000 × 19 × 0.02 = $24,700 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 12:48 AM DATE MODIFIED: 2/15/2017 12:50 AM 15. An insurance company uses the mortality table below to calculate its risk when writing life insurance policies. Age at Death (Females) 60 61 62 63 Mortality Rate 0.007445 0.08187 0.08959 0.09747 Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 10 - Planning for Retirement Based on the table, what is the probability as a percent that a 63-year -old woman will live to see her 64th birthday? a. 97.47% b. 92.53% c. 90.53% d. 90.253% ANSWER: d RATIONALE: 90.253%; 1× 0.09747 = 0.90253 or 90.253% POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 12:54 AM DATE MODIFIED: 2/15/2017 1:16 AM 16. An insurance company sells a 20-year term life insurance policy with a face value of $200,000 to a 45-year -old woman. Her annual premium is $990. If the woman dies after paying premiums for 6 years, what is the insurance company’s gain or loss? a. Loss of $194,060 b. Gain of $199,010 c. Loss of $200,990 d. Gain of $205,940 ANSWER: a RATIONALE: Loss of $194,060; the insurance company pays out $200,000, but only received 6 years of premium; 200,000 – (990 × 6) = $194,060 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 1:18 AM DATE MODIFIED: 2/15/2017 1:20 AM 17. This type of life insurance has an investment portion and an insurance portion. The investment portion has a cash value and the insurance portion pays a death benefit. If the policyholder wants to change the death benefit, he or she must apply for a new policy. a. Term life insurance b. Decreasing term insurance c. Whole life insurance d. Universal life insurance ANSWER: c RATIONALE: Whole life insurance is the only choice that is part investment and part insurance while also requiring you to reapply for a new policy if you want to change your death benefits. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 1:22 AM DATE MODIFIED: 2/15/2017 1:23 AM 18. What is a mortality table? a. A table that lists the premiums that a person pays each month for life insurance. b. A table that lists the probability of a person of a particular sex and age dying before his or her next birthday. c. A table that lists the probability of a person of a particular sex and age discontinuing insurance due to illness. Copyright Cengage Learning. Powered by Cognero.

Page 5

Name:

Class:

Date:

Chapter 10 - Planning for Retirement d. A table that lists the probable causes of death of a person based on his or her sex and age. ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 1:24 AM DATE MODIFIED: 2/15/2017 1:25 AM 19. The probability that a 42-year -old man will die before his 43rd birthday is about 0.29%. If an insurance company insures 30,000 42-year -old men, how many are expected to die before their 43rd birthdays? a. 9 b. 87 c. 870 d. 8,700 ANSWER: b RATIONALE: 87; 30,000 × 0.0029 = 87 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 1:26 AM DATE MODIFIED: 2/15/2017 1:27 AM 20. Don opened a retirement account with an APR of 3.25% compounded monthly. He is planning to retire in 15 years. About how much will he have in the account when he retires if he deposits $750 a month? a. $173,677.27 b. $165,812.50 c. $73,677.21 d. $65,812.50 ANSWER: a RATIONALE:

POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 1:28 AM DATE MODIFIED: 2/15/2017 1:31 AM 21. What is the number of Social Security credits a worker needs to earn over his or her working lifetime to collect Social Security benefits? a. 1 b. 4 c. 40 d. 67 ANSWER: c POINTS: 1 Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 10 - Planning for Retirement QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/15/2017 1:31 AM DATE MODIFIED: 2/15/2017 1:32 AM 22. An insurance company uses the mortality table below to calculate its risk when writing life insurance policies. Age at Death (Males) 50 51 53 54 Mortality Rate 0.0043 0.0049 0.0052 0.0055 If this company insures 12,000 54-year -old men, how many are expected to die before they reach their 55th birthday? 66; 12,000 × 0.055 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:34 AM DATE MODIFIED: 2/15/2017 1:35 AM 23. What is the full retirement age, the age at which a person receives full Social Security benefits, of a person born after 1962? 67 years old ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:36 AM DATE MODIFIED: 2/15/2017 1:36 AM 24. Where does the money come from to pay Social Security benefits today to those who are receiving them? Why is this a concern for the baby boomer generation? These benefits are funded through taxes taken out of employee paychecks. Because so many are ANSWER: entering retirement, there is concern that there will not be enough money collected to pay the growing amount of benefits. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:37 AM DATE MODIFIED: 2/15/2017 1:38 AM 25. Nina’s employer offers a pension plan that is the product of the career average of her salaries while working there, the number of years of service, and a 1.75% multiplier. She calculates the average of her 17 years of salaries to be $54,000. What is her monthly pension? $1,338.75; 54,000 × 17 × 0.0175 = 16,065; 16,065 ÷ 12 = 1,338.75 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:38 AM Copyright Cengage Learning. Powered by Cognero.

Page 7

Name:

Class:

Date:

Chapter 10 - Planning for Retirement DATE MODIFIED: 2/15/2017 1:39 AM 26. What is the difference between an IRA and a 401k? An IRA is opened by an individual and a 401k is sponsored by an employer for an employee. ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:39 AM DATE MODIFIED: 2/15/2017 1:40 AM 27. Mr. Casem is preparing to retire after 31 years with his company. He set up this spreadsheet to calculate his pension, which is based on his most recent three -year average salary, number of years of service, and a 2% multiplier. What are the formulas for cells D1 and D4? What are the resulting values? A B C D 1 Year Salary Three year Average Salary a. 2 1999 49,500 Percentage Multiplier 2.0 3 2000 52,000 Years of Service 31 4 2001 53,000 Annual Pension Benefit b. What are the formulas for cells D1 and D4? What are the resulting values? a. =average(B2:B4) will be $51,500. ANSWER: b. =(D1*D2/100*D3) will be $31,930. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:41 AM DATE MODIFIED: 2/15/2017 1:42 AM 28. Last year, Mrs. Washington had a taxable income of $48,000 and paid about 20% in taxes. This year she contributed $3,000 to a traditional IRA. About how much could her tax liability be reduced? $600; 48,000 × 0.2 = 9,600; 48,000 − 3,000 = 45,000 × 0.2 = 9,000; 9,600 - 9,000 = 600 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:44 AM DATE MODIFIED: 2/15/2017 1:44 AM 29. Marianne opened a retirement account that has an annual yield of 5.5%. She is planning to retire in 25 years. How much should she put into the account each month so that she will have $500,000 when she retires? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 10 - Planning for Retirement HAS VARIABLES: False DATE CREATED: 2/15/2017 1:45 AM DATE MODIFIED: 2/15/2017 6:59 AM 30. Mr. Jenkins is almost 67 years old and is preparing to retire. Over his life, he earned an average of $3,750 per month after adjusting for inflation. The formula for calculating monthly Social Security benefits is 90% of the first $856 earned, then 32% of the earnings over $856. What will Mr. Jenkins’ monthly benefit be? $1,696.48; (0.9 × 856) + (0.32 × (3,750 − 856)) = $1,696.48 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:47 AM DATE MODIFIED: 2/15/2017 1:47 AM 31. Juan changed jobs in 2016. He earned $67,233 working at an insurance company for the first 7 months of the year. When he switched jobs to a textbook company, he was able to negotiate a higher salary and earned $76,144 for the remainder of the year. How much can Juan expect his tax refund to increase in 2016 due to overpaying Social Security taxes? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:48 AM DATE MODIFIED: 2/15/2017 1:52 AM 32. Jackson inherited $50,000 at the age of 42 and had a decision to make. He could deposit the money in a tax -deferred account that pays 3.375% compounded quarterly or he could deposit the money in a taxable account with the same interest rate and compounding period. Jackson’s current tax bracket is 25%, which means he will have to pay taxes on the interest earned each year in the taxable account. How much money could Jackson have saved after 25 years if his decision was to deposit the inheritance into the taxable account? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 1:59 AM Copyright Cengage Learning. Powered by Cognero.

Page 9

Name:

Class:

Date:

Chapter 10 - Planning for Retirement DATE MODIFIED: 2/15/2017 2:08 AM 33. Carolyn has been contributing $350 per month to a pre-tax retirement account since she graduated college at the age of 22. This account has been earning 7% compounded monthly. When she is 48, her youngest child is ready to start college, and Carolyn wants to withdraw 20% of the money in the account for tuition. Carolyn’s tax bracket this year is 25%, and she knows she will have to pay a 10% early withdrawal penalty. How much money will she realize to pay for her child’s tuition? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 3:41 AM DATE MODIFIED: 2/15/2017 3:45 AM 34. Mr. Watkins, born in 1956, is almost 61 years old and is hoping to retire at the age of 62. Over his life, he earned an average of $75,000 per year after adjusting for inflation. The formula for calculating monthly Social Security benefits is 90% of the first $856 earned each month, plus 32% of the monthly earnings over $856 but less than or equal to $5,157 plus 10% of the monthly earning over $5,157. Mr. Watkins has been informed that his full retirement benefit will be reduced by 5/9% for every month he retires before the age of 66 years and 4 months. What will Mr. Watkins’ monthly benefit be? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 3:46 AM DATE MODIFIED: 2/15/2017 4:37 AM 35. Isaiah’s employer has a pension plan that pays 2.2% of the average of his highest three-year salary for every year worked. Isaiah has been with this company for 15 years, and his last three years’ salaries were $77,500; $81,000; and $81,500. What will his monthly pension amount be after three years in retirement if the cost-of-living adjustment is 2.5% per year? Copyright Cengage Learning. Powered by Cognero.

Page 10

Name:

Class:

Date:

Chapter 10 - Planning for Retirement ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 4:26 AM DATE MODIFIED: 2/15/2017 4:29 AM 36. Constance arranged for a universal life insurance policy with a face value of $450,000, when she was married. The current cash value of the policy is $12,132. Her premium is $1,500 per year. She wants to buy a new car and is looking for items in her budget that can be put towards the car payment. How many years and months could she suspend her premium payment so that the cash value could be used to pay the premium? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 4:37 AM DATE MODIFIED: 2/15/2017 4:53 AM 37. New York Life sells a five-year term insurance policy with a face value of $250,000 to a 50-year old man for a monthly premium of $75.00. Using the mortality table below, determine the probability that the customer lives until he is at least 55. Age at Death (Males) Mortality Rate

50 0.0043

51 0.0049

53 0.0052

54 0.0055

Age 54

ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 6:25 AM DATE MODIFIED: 2/15/2017 6:28 AM 38. Sherlock invested a $100,000 reward for making sure an embezzler was caught and sent to prison into various types of investments. He invested 20% in corporate bonds, 25% in income stocks, 15% in growth stocks, 10% in penny stocks, and the remainder in a 10-year certificate of deposit. During the next year, the corporate bonds earned 7%, the income stocks earned 13%, the growth stocks earned 21%, the penny stocks lost 67%, and the CD earned 2%. At the end of the year, what percent change did Sherlock see in his portfolio?

Page 11

Name:

Class:

Date:

Chapter 10 - Planning for Retirement ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 6:30 AM DATE MODIFIED: 2/15/2017 6:41 AM 39. Fulton has been paying $150 per month for a $200,000 whole life insurance policy for the past 29 years. It has a cash value of $128,000. He recently heard that the S&P 500 has averaged an 8.7% annual return over the past 35 years. If he had invested the premiums in stock funds instead, would his balance be enough to offset the death benefit if he died tomorrow? ANSWER:

Yes, if Fulton had a crystal ball 29 years ago, he would have been better off to invest it in the S&P 500. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 6:38 AM DATE MODIFIED: 2/15/2017 6:41 AM 40. Caleb’s annual salary is $45,000 per year. His employer matches 75% of his 401k contributions up to 10% of his annual salary. Caleb contributes $250 from each biweekly paycheck to his 401k account. What is the combined total of his annual contribution and his employer’s contribution? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 6:42 AM DATE MODIFIED: 2/15/2017 6:44 AM Copyright Cengage Learning. Powered by Cognero.

Page 12

Name:

Class:

Date:

Chapter 10 - Planning for Retirement 41. Cameron started contributing $400 per month to a retirement account when he was married at the age of 26. The account earned 8.7% compounded monthly until Cameron’s finances changed when he was 48. His first child started college that year. Cameron didn’t want to pay taxes or a penalty on an early withdrawal, but he did stop his monthly contributions to help pay for college. He moved the money in the account to a more conservative investment paying 4.9% compounded monthly until he was 60 and could begin withdrawing funds without penalty. Now Cameron wants to withdraw $2,500 per month to supplement his pension. How old will Cameron be when the money in this account runs out? ANSWER:

Cameron will be 114 years old when his money runs out if he withdraws $2,500 per month from an account earning 4.9% compounded monthly. POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/15/2017 6:51 AM DATE MODIFIED: 2/15/2017 6:57 AM

Page 13

Name:

Class:

Date:

Chapter 11 - Prepare a Budget 1. A cash flow analysis is a type of budget that helps people plan for future spending and savings. a. True b. False ANSWER: False RATIONALE: A cash flow analysis is a detailed account of how money comes in and goes out over a fixed period of time. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 4:51 AM DATE MODIFIED: 2/8/2017 5:49 AM 2. Some examples of variable expenses are utility bills and entertainment costs. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 5:56 AM DATE MODIFIED: 2/8/2017 5:57 AM 3. Andy has a 40-hour per week job and leaves a certain radio on all day while he works. This radio requires 125 watts of electricity. At a price per kilowatt-hour of $0.10, it costs $0.10 to play the radio all day. a. True b. False ANSWER: True RATIONALE: The radio uses 1,000 watt-hours. 8 x 125 = 1,000 1,000 watt-hours is 1 kilowatt-hour. POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 5:57 AM DATE MODIFIED: 2/16/2017 12:09 AM 4. Tamika created this pie chart of her entertainment budget. According to the chart, if Tamika’s budget is $125 for entertainment, $36 is budgeted for shopping.

Page 1

Name:

Class:

Date:

Chapter 11 - Prepare a Budget

Page 2

Name:

Class:

Date:

Chapter 11 - Prepare a Budget 5. Net worth is the difference between a person’s assets and their liabilities. Net worth can be a positive number or a negative number. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 6:34 AM DATE MODIFIED: 2/8/2017 6:35 AM 6. A nursery located in Florida uses a water meter to measure its water usage in CCF. It is charged $0.36 per CCF of water. Its last meter reading was 123,692 and their present reading is 127,394. For this usage, the nursery was charged $332.72. a. True b. False ANSWER: False RATIONALE: 127,394 − 123,692 = 3,702 × 0.36 = $1,332.72 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 6:35 AM DATE MODIFIED: 2/16/2017 12:14 AM 7. The Yamamotos use natural gas to heat their home. Last year they paid $14.50 per thousand cubic feet (Mcf). The price increased 20% this year, so they are now paying $17.4 per Mcf. a. True b. False ANSWER: True RATIONALE: 14.5 × 0.2 = 2.9; 2.9 + 14.5 = 17.4 POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 6:48 AM DATE MODIFIED: 2/16/2017 12:15 AM 8. Randy and Jake are brothers living in the same city in homes that are about the same age and size. One brother has recently purchased an energy-efficient gas furnace while the other brother relies on an older, less efficient, oil furnace. By comparing the lines of the graph, it appears that Randy has the more energy-efficient furnace.

Page 3

Name:

Class:

Date:

Chapter 11 - Prepare a Budget

a. True b. False ANSWER: RATIONALE:

False The lower line is Jake’s energy expenses, which are less than Randy’s. Therefore, Jake must have the more efficient furnace POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 7:00 AM DATE MODIFIED: 2/16/2017 12:18 AM 9. A spreadsheet is an example of an electronic matrix. a. True b. False ANSWER: True POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 7:04 AM DATE MODIFIED: 2/8/2017 7:05 AM 10. Jane wants to keep her debt-to-income ratio at the recommended 15% or lower. The sum of Jane’s assets is $12,000 and the sum of her liabilities is $2,300, so she easily falls within the recommended amount. a. True b. False ANSWER: False RATIONALE: 2,300 ÷ 12,000 = 19.17% Copyright Cengage Learning. Powered by Cognero.

Page 4

Name:

Class:

Date:

Chapter 11 - Prepare a Budget POINTS: 1 QUESTION TYPE: True / False HAS VARIABLES: False DATE CREATED: 2/8/2017 7:06 AM DATE MODIFIED: 2/8/2017 7:08 AM 11. Last month, Marybeth was charged $112 for 945 kWh of electricity. How much did the company charge her per kWh, to the nearest cent? a. $0.06 b. $0.08 c. $0.10 d. $0.12 ANSWER: d RATIONALE: 112 ÷ 945 ≈ $0.12 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 7:12 AM DATE MODIFIED: 2/16/2017 12:19 AM 12. Sarah lives in a part of the country where there are droughts. Consequently, the water company increases the cost per CCF of water based on usage. The piecewise function shows the rate schedule.

If Sarah used 210 CCF of water last month, what was she charged? a. $37.80 b. $38.80 c. $39.80 d. $47.00 ANSWER: c RATIONALE: 0.18(160) + 0.22(210 − 160) = $39.80 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 7:25 AM DATE MODIFIED: 2/16/2017 12:28 AM 13. Which statement is NOT part of a debt-reduction plan? a. Lower debts with the highest interest rates. b. Slow or eliminate credit card spending c. Only pay the minimum amount when possible. d. Use an online debt management calculator. ANSWER: c POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero.

Page 5

Name:

Class:

Date:

Chapter 11 - Prepare a Budget DATE CREATED: 2/8/2017 7:31 AM DATE MODIFIED: 2/16/2017 12:30 AM 14. Jose and Lisa Sanchez created a spreadsheet to chart their income and expenses for the month. The sum of their fixed expenses is in cell B10, the sum of their variable expenses is in cell B23, and the sum of their pro-rated non-monthly expenses is in cell B40. What formula should be entered in the spreadsheet cell that contains their total expenses? a. =SUM(B10-B40) b. =SUM(B10:B23:B40) c. =SUM(B10*B23*B40) d. =SUM(B10+B23+B40) ANSWER: d RATIONALE: Use the sum function, separating each cell that is being added with a plus sign. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 7:33 AM DATE MODIFIED: 2/16/2017 12:32 AM 15. A single woman uses an online cash flow calculator which reveals a cash flow of –203. What does this mean? a. She is earning more than she is spending b. She is spending more than she is earning. c. She has $203 extra in her budget each month. d. She has $203 more she can spend. ANSWER: b RATIONALE: A negative number means there is more output or expenses than input, or income. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 7:37 AM DATE MODIFIED: 2/16/2017 12:34 AM 16. Mrs. Watanabe is choosing a cell phone plan. One plan costs $35 a month and includes 450 minutes. The charge for each minute over 450 is $0.16. The company also offers an unlimited calling plan with a $55 monthly charge. At how many minutes would the cost of the two plans be the same a. 575 minutes b. 566 minutes c. 552 minutes d. 525 minutes ANSWER: a RATIONALE: 35 + 0.16(x – 450) = 55; x = 575 POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 9:04 AM DATE MODIFIED: 2/16/2017 12:35 AM 17. Ralph has budgeted $175 for entertainment. He uses this money to go out on dates for $35 or to go out with his friends for $15. Which budget line equation represents the situation? Copyright Cengage Learning. Powered by Cognero.

Page 6

Name:

Class:

Date:

Chapter 11 - Prepare a Budget a. 35x – 15y = 175 b. 35x + 15y = 175 c. (3x + 5y) = 175 d. 175 – (35x + 15y) ANSWER: b POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 9:08 AM DATE MODIFIED: 2/16/2017 12:37 AM 18. Mrs. Kalbrisa budgets $125 a month for entertainment. She has allocated $10 for the movies and $25 for dining out. She constructs the following budget line graph to represent the situation, where x is the number of movies and y is the number of times she dines out in a month. What combination does NOT fall within her budgeted amount for entertainment?

a. (5, 3) b. (3, 3) c. (1, 4) d. (7, 5) ANSWER: d RATIONALE: 10(7) + 25(5) = 70 + 125 = $192; this is greater than the budgeted $125. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 9:11 AM DATE MODIFIED: 2/16/2017 12:41 AM 19. Which is NOT an example of a budget? a. Frequency budget plan b. Envelope accounting system Copyright Cengage Learning. Powered by Cognero.

Page 7

Name:

Class:

Date:

Chapter 11 - Prepare a Budget c. Cash flow analysis d. Year-long expense budget plan ANSWER: c RATIONALE: A cash flow analysis shows where the money comes in and goes out, but it is not a budget that is a financial plan for paying debt and creating savings. POINTS: 1 QUESTION TYPE: Multiple Choice HAS VARIABLES: False DATE CREATED: 2/8/2017 9:13 AM DATE MODIFIED: 2/16/2017 12:42 AM 20. Manuel works for the water company as a meter reader. The meter below is the Jansen’s water meter. What is the reading, in CCF, on the meter shown?

5,690 CCF ANSWER: POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/8/2017 9:20 AM DATE MODIFIED: 2/16/2017 12:44 AM 21. Xavier’s monthly assets and liabilities are in the table below. What is Xavier’s debt-to-income ratio? Monthly Liabilities Monthly Assets Rent $750 Gross Salary Full-time job $2,500 Student Loan $100 Gross Salary Part-time job $600 Copyright Cengage Learning. Powered by Cognero.

Page 8

Name:

Class:

Date:

Chapter 11 - Prepare a Budget Credit Card Car loan ANSWER:

$125 $210 Liabilities: 750 + 100 + 125 = 210 = 1,185 Assets: 2,500 + 600 = 3,100 1,185 ÷ 3,100 ≈ 38% POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/8/2017 9:23 AM DATE MODIFIED: 2/16/2017 12:45 AM 22. Katelyn is shopping for a cellular phone service. Trenton Bell charges a monthly fee of $40 for up to 500 minutes. For every minute over 500, it charges an additional $0.18. Write a piecewise function to represent the cost of this plan. ANSWER: POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/8/2017 9:26 AM DATE MODIFIED: 2/16/2017 12:48 AM 23. Construct a bar graph using the information below on transportation-related costs. Transportation Jan Feb Mar Apr May June Costs 210 210 210 210 210 210 Car Payment 45 45 45 45 45 45 Insurance 110 115 120 110 90 100 Gasoline 30 30 30 30 30 30 Parking 0 0 35 175 0 35 Repairs and Maintenance

Page 9

Name:

Class:

Date:

Chapter 11 - Prepare a Budget ANSWER:

POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/8/2017 9:27 AM DATE MODIFIED: 2/16/2017 12:53 AM 24. Richard and Samantha are charting their monthly cash flow. They have some expenses like car repairs and vacations that are not paid each month. How can they account for these non-monthly expenses? Pro-rate them as if they were monthly expenses. ANSWER: POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/8/2017 9:30 AM DATE MODIFIED: 2/8/2017 9:34 AM 25. Last year, Maria spent $2,388 for natural gas. This year, she decided to use balance billing. What will her monthly payment be this year? $199; 2,388 ÷ 12 = 199 ANSWER: POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 3:52 AM DATE MODIFIED: 2/9/2017 3:53 AM 26. The Lisbons' new heat pump cost $4,500. They bought it to replace their old furnace and air conditioner which cost about $2,800 a year to run. The heat pump will save them approximately 39% a year. In how many years will the heat pump pay for itself? Round to the nearest tenth. ANSWER: 4.1 years; 2,800  0.39 = 1,092; 4,500 ÷ 1,092 ≈ 4.1 Copyright Cengage Learning. Powered by Cognero.

Page 10

Name:

Class:

Date:

Chapter 11 - Prepare a Budget POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 2:52 PM DATE MODIFIED: 2/16/2017 12:54 AM 27. Use the pie chart of health-related and personal care items. If the Lee family has $800 per month budgeted for heathrelated items, how much do they have budgeted for each of the four categories below?

Page 11

Name:

Class:

Date:

Chapter 11 - Prepare a Budget

Page 12

Name:

Class:

Date:

Chapter 11 - Prepare a Budget 28. A certain refrigerator requires 170 watts of electricity when it is running. It typically runs about 20 minutes per hour. How much does it cost to run this refrigerator for one year if the cost per kWh is $0.11? ANSWER: $54.60; it runs a third of the time in a day, so it runs 8 hours a day. 8  365 = 2,920 hours a year. The watt-hours are 170  2,920 = 496,400. For kWh, divide by 1,000. 496,400 ÷ 1,000 = 496.4 kWh. 0.11  496.4 ≈ $54.60. POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 2:55 PM DATE MODIFIED: 2/16/2017 12:58 AM 29. Roderick has an Internet service that charges by the hour. This piecewise function shows the cost of the Internet service based on the number of hours that Roderick uses the Internet. Last month, Roderick used the Internet for 7.5 hours. What was he charged?

$18.75; 10 + 2.50(7.5 – 4) = $18.75 ANSWER: POINTS: 1 QUESTION TYPE: Objective Short Answer HAS VARIABLES: False DATE CREATED: 2/9/2017 3:00 PM DATE MODIFIED: 2/16/2017 1:01 AM 30. Michelle’s last electric bill listed a previous reading of 17,934 kWh. This month, the electric meter reading is 18,796 kWh. If the electric company charges $0.09 per kWh, what is the charge for usage? $77.58; 18,796 − 17,934 = 862; 862 × 0.09 = $77.58 ANSWER: POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/16/2017 1:05 AM DATE MODIFIED: 2/16/2017 1:06 AM 31. William wants to keep his debt-to-income ratio at the recommended 15% or lower. William’s house payment is $1,012.84 and his car payment is $579.13. He also has student loans he is repaying in the amount of $250.00 per month. William has eliminated credit cards spending except for budgeted items and continues to pay $300 per month to eliminate his credit card debt. He is looking for a new job. What should his new annual salary goal be in order to keep his debt-toincome ratio at the recommended 15%? ANSWER:

Page 13

Name:

Class:

Date:

Chapter 11 - Prepare a Budget POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/16/2017 1:07 AM DATE MODIFIED: 2/16/2017 1:10 AM 32. The Potters received a phone call from New Energy informing them of their new electric rates of $0.048 per kWh. That sounded good, but Harry wanted to see how that compared to his current rate before making a decision. After looking at his bills for the past year, it was obvious that the Potters used 15,719 kWh during the year and paid $828.38 in electric charges. What is the net change percentage between their current rate and the rate being offered? Should the Potters take advantage of the offer from New Energy? Yes, the Potters will save ½ cents per kWh for a savings of 9.43%. ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/16/2017 1:11 AM DATE MODIFIED: 2/16/2017 1:13 AM 33. The Dursleys’ heat pump stopped working on the hottest day of the year. The old one wasn’t very efficient and Mr. Dursley decided to buy an energy efficient heat pump to save on energy costs. The old heat pump used 15,000 watts of energy and his current electric costs are $0.1233/kWh. The replacement model he is considering uses 11,000 watts of energy to provide the same level of heating and cooling. Mr Dursley’s research for his area of the country indicates that a heat pump is used, on average, 4 hours per day. If the new heat pump costs $5,000 and he is eligible for a 15% energy tax credit in the year he has it installed, how long will it take for the energy costs to pay for the new heat pump? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/16/2017 1:15 AM DATE MODIFIED: 2/16/2017 1:21 AM 34. Draco recently purchased a new Surface Book for $2,300. The Surface Book draws 24W of electricity, and Draco leaves it on except when sleeping (approximately 16 hours per day). His current electric costs are $0.1233/kWh. Draco purchased a 4-year replacement plan for $80 per year. What is the average yearly cost to own and operate this computer if he intends to use it for the next 4 years?

Page 14

Name:

Class:

Date:

Chapter 11 - Prepare a Budget ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/16/2017 1:23 AM DATE MODIFIED: 2/16/2017 1:24 AM 35. The Smythes believe their water meter is not working properly and started keeping track of their meter readings. Mr. Smythe thinks that if he can calculate the amount of water he was charged for using the provider’s published piecewise function for water costs and compare it to his own reading, he will know wether meter is working correctly. If their total bill last month was $45.96, how many CCF of water should they have used?

ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/16/2017 1:26 AM DATE MODIFIED: 2/16/2017 1:32 AM 36. The Grangers manage their money by using a monthly budget. Mr. Granger’s semi-monthly salary is $2,800, and Mrs. Granger’s biweekly salary is $4,150. Mr. Granger’s net income of approximately 64% of his salary is deposited in their savings account each paycheck, whereas Mrs. Granger sees 66% of her salary deposited into their savings account. How much money should the Grangers transfer from their savings to checking to cover their monthly expenses if their goal is to leave 12% of budgeted income in savings and an additional 36% of budgeted income to cover non-monthly expenses (i.e., water, insurance, property taxes, vacations, Christmas, charitable giving, home maintenance, etc.)? ANSWER:

POINTS: 1 QUESTION TYPE: Subjective Short Answer HAS VARIABLES: False DATE CREATED: 2/16/2017 1:36 AM Copyright Cengage Learning. Powered by Cognero.

Page 15

Name:

Class:

Date:

Chapter 11 - Prepare a Budget DATE MODIFIED: 2/16/2017 1:44 AM

Page 16