BUSINESS MATH FINAL

1

Multiple choice:

An annuity is?

Not used by lotteries today

A one time payment

A stream of payments

Never made up of equal payments

None of the available answers

2

To find the value of an annuity due using the tables, only 1 extra period needs to be added to the number of periods

A . true

B. false

3

Maturity valuse is equal to principle plus interest when considering a Treasury Bil

True

B. False

4

Ordinary annuity payments are made:

At the end of the period

Yearly

Monthly

at the beginning of the period

None of the available answers

5

What are the differences between an ordinary annuity and an annuity due?

6

What type of annuity is a Sinking fund?

7

Maturity value is equal to principle plus interest when concidering a Promissory Note?

True

False

8

Depreciation expense results in an indirect tax savings

A . True

False

9

The monthly payment is calculated by totaling the finance charge and the amount financed divided by the number of payments of the loan.

True

False

10

The amount of down payment one makes on a home directly affects the size of the monthly payments

True

False

11

A monthly payment of $ 850 on a 30 year $ 80,000 mortgage results in a total cost of interest of $ 306,000.

True

False

12

What are points on a mortgage?

13

The total cost of interest is equal to the total of all monthly payments:

Divided by the amount of the mortgage

Less the amount of the mortgage

Plus the amount of the mortgage

Times the amount of the mortgage

None of the answers

14

From the following facts, for straight-line depreciation, what is:

Given:

Cost - $ 35,000

Residual Value $ 15,000

Est. . useful life 4

Required:

Yearly depreciation

15

From the following facts, for straight-line depreciation, what is:

Given:

Cost - $ 35,000

Residual Value $ 15,000

Est. . useful life 4

Required:

Cost of Equipment at the end of year 2

16

From the following facts, for straight-line depreciation, what is:

Given:

Cost - $ 35,000

Residual Value $ 15,000

Est. . useful life 4

Required:

Book value at the end of year 3

17

From the following facts, for the units produced depreciation, what is:

Given:

COST - $ 40,000

RESIDUAL VALUE $ 5,000

Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year:

YEAR 1 - 20,000

YEAR 2- 15,000

YEAR 3- 25,000

YEAR 4 - 32,000

YEAR 5 - 17,000

YEAR 6: - 15,000

Required:

Depreciation per unit

18

From the following facts, for the units produced depreciation, what is:

Given:

COST - $ 40,000

RESIDUAL VALUE $ 5,000

Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year:

YEAR 1 - 20,000

YEAR 2- 15,000

YEAR 3- 25,000

YEAR 4 - 32,000

YEAR 5 - 17,000

YEAR 6: - 15,000

Required:

Total accumulated depreciation at the end of year 4

19

From the following facts, for the units produced depreciation, what is:

Given:

COST - $ 40,000

RESIDUAL VALUE $ 5,000

Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year:

YEAR 1 - 20,000

YEAR 2 : 20,000

YEAR 2- 15,000

YEAR 3- 25,000

YEAR 4 - 32,000

YEAR 5 - 17,000

YEAR 6: - 15,000

Required:

Book value at the end of year 3

20

From the following facts, for the units produced depreciation, what is:

Given:

COST - $ 40,000

RESIDUAL VALUE $ 5,000

Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year:

YEAR 1 - 20,000

YEAR 2- 15,000

YEAR 3- 25,000

YEAR 4 - 32,000

YEAR 5 - 17,000

YEAR 6: - 15,000

Required:

Number of years the equipment is depreciated

21

USE THE AMORTIZATION TABLE TO ANSWER THIS QUESTION:

Bob Jones bought a new log cabin for $ 325,000, at 8% interest for 30 years. He had to pay 20% down to obtain the loan.

Required:

From the amortization table:

How much of the monthly payment is applied to interest in the first month?

22

USE THE AMORTIZATION TABLE TO ANSWER THIS QUESTION:

Bob Jones bought a new log cabin for $ 325,000, at 8% interest for 30 years. He had to pay 20% down to obtain the loan.

Required:

From the amortization table:

How much of the monthly payment is applied to principle in the second month?

23

USE THE AMORTIZATION TABLE TO ANSWER THIS QUESTION:

Bob Jones bought a new log cabin for $ 325,000, at 8% interest for 30 years. He had to pay 20% down to obtain the loan.

Required:

From the amortization table:

What is the outstanding balance after the third payment?

24

From the following facts, for Sum-of-Years-Digits, what is:

Given:

COST - $ 15,000

RESIDUAL VALUE - $ 4,000

Est. useful life - 4 years

Required:

What is the book value for the end of year 3?

25

From the following facts, for Sum-of-Years-Digits, what is:

Given:

COST - $ 15,000

RESIDUAL VALUE - $ 4,000

Est. useful life - 4 years

Required:

What is the Accumulated Depreciation for the end of year 3?

26

From the following facts, for Sum-of-Years-Digits, what is:

Given:

COST - $ 15,000

RESIDUAL VALUE - $ 4,000

Est. useful life - 4 years

Required:

Yearly depreciation for year 3?

BUSINESS MATH FINAL 1 Multiple choice:

An annuity is? a. Not used by lotteries today b. A one time payment c. A stream of payments d. Never made up of equal payments e. None of the available answers 2 To find the value of an annuity due using the tables, only 1 extra period needs to be added to the number of periods A . true B. false 3 Maturity valuse is equal to principle plus interest when considering a Treasury Bil a. True b. B. False 4 Ordinary annuity payments are made: a. At the end of the period b. Yearly c. Monthly d. at the beginning of the period e. None of the available answers 5 What are the differences between an ordinary annuity and an annuity due?

6 What type of annuity is a Sinking fund? 7 Maturity value is equal to principle plus interest when concidering a Promissory Note?

a. True b. False 8 Depreciation expense results in an indirect tax savings A . True False 9 The monthly payment is calculated by totaling the finance charge and the amount financed divided by the number of payments of the loan. a. True b. False

10 The amount of down payment one makes on a home directly affects the size of the monthly payments a. True b. False 11 A monthly payment of $ 850 on a 30 year $ 80,000 mortgage results in a total cost of interest of $ 306,000. a. True b. False 12 What are points on a mortgage? 13 The total cost of interest is equal to the total of all monthly payments: a. Divided by the amount of the mortgage b. Less the amount of the mortgage c. Plus the amount of the mortgage d. Times the amount of the mortgage e. None of the answers 14 From the following facts, for straight-line depreciation, what is:

Given: Cost - $ 35,000 Residual Value $ 15,000 Est. . useful life 4

Required: Yearly depreciation

15 From the following facts, for straight-line depreciation, what is:

Given: Cost - $ 35,000 Residual Value $ 15,000 Est. . useful life 4

Required: Cost of Equipment at the end of year 2

16 From the following facts, for straight-line depreciation, what is:

Given: Cost - $ 35,000 Residual Value $ 15,000 Est. . useful life 4

Required: Book value at the end of year 3

17 From the following facts, for the units produced depreciation, what is:

Given: COST - $ 40,000 RESIDUAL VALUE $ 5,000 Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year: YEAR 1 - 20,000 YEAR 2- 15,000 YEAR 3- 25,000 YEAR 4 - 32,000 YEAR 5 - 17,000 YEAR 6: - 15,000

Required: Depreciation per unit

18 From the following facts, for the units produced depreciation, what is:

Given: COST - $ 40,000 RESIDUAL VALUE $ 5,000 Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year: YEAR 1 - 20,000 YEAR 2- 15,000 YEAR 3- 25,000 YEAR 4 - 32,000 YEAR 5 - 17,000 YEAR 6: - 15,000

Required: Total accumulated depreciation at the end of year 4

19 From the following facts, for the units produced depreciation, what is:

Given: COST - $ 40,000 RESIDUAL VALUE $ 5,000 Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year: YEAR 1 - 20,000

YEAR 2 : 20,000 YEAR 2- 15,000 YEAR 3- 25,000 YEAR 4 - 32,000 YEAR 5 - 17,000 YEAR 6: - 15,000

Required: Book value at the end of year 3

20 From the following facts, for the units produced depreciation, what is:

Given: COST - $ 40,000 RESIDUAL VALUE $ 5,000 Est. TOTAL UNITS PRODUCED FOR USEFUL LIFE CALCULATION $ 100,000

Units Produced per year: YEAR 1 - 20,000 YEAR 2- 15,000 YEAR 3- 25,000 YEAR 4 - 32,000 YEAR 5 - 17,000 YEAR 6: - 15,000

Required: Number of years the equipment is depreciated

21 USE THE AMORTIZATION TABLE TO ANSWER THIS QUESTION:

Bob Jones bought a new log cabin for $ 325,000, at 8% interest for 30 years. He had to pay 20% down to obtain the loan.

Required: From the amortization table:

How much of the monthly payment is applied to interest in the first month?

22 USE THE AMORTIZATION TABLE TO ANSWER THIS QUESTION:

Bob Jones bought a new log cabin for $ 325,000, at 8% interest for 30 years. He had to pay 20% down to obtain the loan.

Required: From the amortization table:

How much of the monthly payment is applied to principle in the second month?

23 USE THE AMORTIZATION TABLE TO ANSWER THIS QUESTION:

Bob Jones bought a new log cabin for $ 325,000, at 8% interest for 30 years. He had to pay 20% down to obtain the loan.

Required: From the amortization table:

What is the outstanding balance after the third payment?

24 From the following facts, for Sum-of-Years-Digits, what is:

Given: COST - $ 15,000 RESIDUAL VALUE - $ 4,000 Est. useful life - 4 years

Required: What is the book value for the end of year 3?

25 From the following facts, for Sum-of-Years-Digits, what is:

Given: COST - $ 15,000 RESIDUAL VALUE - $ 4,000 Est. useful life - 4 years

Required: What is the Accumulated Depreciation for the end of year 3?

26 From the following facts, for Sum-of-Years-Digits, what is:

Given: COST - $ 15,000 RESIDUAL VALUE - $ 4,000 Est. useful life - 4 years

Required: Yearly depreciation for year 3?