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In an ordinary annuity the interest on a yearly investment starts building interest:
 
A. At the beginning of the first period
B. At the end of the first period
C. During the first period
D. After the second period ends
E. None of these
   
Lee Associates borrowed $60,000. The company plans to set up a sinking fund that will pay back the loan at the end of 12 years.
Assuming a rate of 8% compounded semiannually, the amount to be paid into the fund each period is (use the tables in the handbook):
 
A. $1,350
B. $1,536
C. $1,653
D. $5,163
E. None of these
   
An annuity due can use the ordinary annuity table if one extra period is added and:
 
A. Add one payment to total value
B. Subtract one payment from total value
C. Add two payments to total value
D. Subtract three payments from total value
E. None of these
   
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 these
   
Contingent annuities:
 
A. Have a fixed amount of payments
B. Pay for 30 years
C. Are only paid by the month
D. Have no fixed amount of payments
E. None of these
   
Jones Co. borrowed money that is to be repaid in 12 years. So that the loan will be paid back at end of the 12th year,
the company invests $8,000 at end of each year at 5% compounded annually. The amount of the original loan was
(use the tables in the handbook):
 
A. $127,336.80
B. $70,905.60
C. $127,636.80
D. $70,950.60
E. None of these
 
 
How much would Howard Steele need to invest today so that he may withdraw $12,000 each year for the next 20 years,
assuming a rate of 8% compounded annually? (Use the tables in the handbook.)
 
A. $117,817.20
B. $454,144.00
C. $112,817.20
D. $549,144
E. None of these
 

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Chapter Tests             01  02  03  04  05  06  07  08  09  10  11  12  13  14  15  16 17 18  19  20  21  22                 Unit Test 01  02  03  04  05  06        
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Lance Rice has decided to invest $1,200 quarterly for eight years in an ordinary annuity at 4%.
The total cash value of the annuity at end of year 8 is (use the tables in the handbook):
 
A. $46,642.80
B. $44,992.92
C. $46,246.80
D. $44,292.92
E. None of these
   
Jorgen Grace made deposits of $250 at the end of each year for 12 years. The rate received was 6% annually.
What is the value of the investment after 12 years?
 
A. $2,028
B. $3,000
C. $4,217.48
D. $4,200
E. None of these
   
A sinking fund:
 
A. Requires at the beginning one lump sum payment
B. Is really not an annuity
C. Aids in meeting a future obligation
D. Does not compound its money
E. None of these
   
Given a mortgage of $48,000 for 15 years with a rate of 11%, what are the total finance charges?
 
A. $50,236.80
B. $5,023.68
C. $545.76
D. $54,576
E. None of these
   
The APR represents the:
 
A. Stated rate of interest
B. True effective quarterly interest rate charged by seller
C. True effective annual rate of interest charged by buyer
D. True effective annual rate of interest charged by seller
E. None of these
   
Most companies calculate the finance charge on credit card accounts as a percentage of the:
 
A. Daily balance
B. Weekly balance
C. Average daily balance
D. Average weekly balance
E. None of these
   
Which one of the following statements is incorrect?
 
A. APR is the true effective annual interest charged by sellers
B. The Truth in Lending Act regulates interest charges
C. APR represents the true effective annual rate of interest
D. None of these
   
Given the following:
 
29 day billing cycle
4/17 Billing date previous balance $1,100
4/27 Payment 700
4/29 Charge 300
5/7 Payment 50
 
The average daily balance is:
 
A. $910.34
B. $755.17
C. $810.43
D. $755.71
E. None of these ($801.72)
   
The finance charge is equal to the total of all monthly payments:
 
A. Plus amount financed
B. Minus amount financed
C. Divided by amount financed
D. Multiplied by amount financed
E. None of these
   
Mia Lane bought a high-definition television for $7,500. Based on her income, she could afford to pay back only $600 per month.
There is 1 ½% monthly interest charge on the unpaid balance. The U.S. Rule is used in the calculation. At the end of month 1,
the balance outstanding is:
A. $6,012.50
B. $5,012.50
C. $4,012.50
D. $3,012.50
E. None of these ($7,012.50)
   
In calculating the daily balance, cash advances are:
A. Added in
B. Subtracted out
C. Sometimes added in
D. Sometimes subtracted out
E. None of these
A. Added in
   
Dan Miller bought a new Toyota truck for $28,000. Dan made a down payment of $6,000 and paid $390 monthly for 70 months.
The total finance charge was:
A. $13,300
B. $5,300
C. $11,300
D. $27,300
E. None of these
   
Open credit in a revolving charge plan results in:
A. One purchase per month
B. The U.S. Rule being applied to each purchase
C. As many cash purchases till credit limit is reached
D. As many charged purchases till credit limit is reached
E. None of these
   
Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6 ½% for 30 years. Using the table in the handbook
 his monthly payment is:
A. $1,319.04
B. $1,319.40
C. $1,216.80
D. $1,139.40
E. None of these

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Chapter Tests             01  02  03  04  05  06  07  08  09  10  11  12  13  14  15  16 17 18  19  20  21  22                 Unit Test 01  02  03  04  05  06        
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A $104,000 selling price with $24,000 down at 8 1/2% for 25 years results in a monthly payment of:
A. $644.80
B. $645.60
C. $546.06
D. $654.60
E. None of these
A. $644.80
   
The difference between the monthly payments on a $120,000 home at 6 ½% and at 8% for 25 years is (use the table in the handbook):
A. $81.12
B. $151.02
C. $115.20
D. $91.12
E. None of these
   
Chin Woo bought a home for $160,000. He put down 20%. The mortgage is at 8 1/2% for 25 years.
Using the table in the handbook, his yearly payments are:
A. $1,238.00
B. $12,380.16
C. $12,830.61
D. $12,380.61
E. None of these
   
Dick Hercher bought a home in Homewood, Illinois, for $230,000. He put down 20% and obtained a mortgage
for 25 years at 8%. The total interest cost of the loan is:
A. $184,000.00
B. $327,372.80
C. $242,411.00
D. $242,144.00
E. None of these
   
Abe Aster bought a new split level for $200,000. Abe put down 30%.
Assuming a rate of 11 1/2% on a 30-year mortgage, Abe's monthly payment is (use the table in the handbook):
A. $1,423.80
B. $1,387.40
C. $1,367.80
D. $1,982.00
E. None of these
   
Marsha Terban bought a home for $119,000 with a down payment of $19,000. Her rate of interest is 12 1/2% for 35 years.
The balance of the mortgage at the end of the first month is:
A. $3.33
B. $98,944
C. $99,669.76
D. $99,985.67
E. None of these
   
An amortization schedule shows:
A. Balance of interest outstanding
B. The increase to principal
C. Increase in loan outstanding
D. Portion of payment broken down to interest and principal
E. None of these
   
Jill Diamond bought a home for $190,000 with a down payment of $65,000.
The rate of interest was 7% for 35 years. Her monthly mortgage payment is:
A. $843.75
B. $834.57
C. $798.75
D. $978.57
E. None of these
   
Darlene Ramirez bought a home for $140,000. She put 20% down with a
mortgage rate at 7.5% for 25 years. Her yearly payments are:
A. $1,776
B. $9,932.16
C. $12,415.20
D. $9,329.61
E. None of these
   
Complete the trend analysis for sales for year 3 (Round to nearest tenth percent):
 
·         Year 4 $782,143
·         Year 3 $655,211
·         Year 2 $605,000
·         Year 1 $646,133
 
A. 103.9%
B. 101.4%
C. 109.3%
D. 110.2%
E. None of these
   
Given the following:
 
·         Name / 2010 / 2011 / 2012
·         Sales / 400,000 / 350,000 / 470,000
·         Gross Profit / -100,000 / -130,000 / -140,000
·         Net income / 300,000 / 220,000 / 230,000
 
By trend analysis (base year is 2010), sales in 2012 to the nearest percent of the base year is:
 
A. 117%
B. 116%
C. 118%
D. 119%
E. None of these
   
Which of the following is not a current asset?
A. Cash
B. Building
C. Prepaid expense
D. Accounts receivable
E. None of these
   
Which one is not used to calculate net sales?
A. Purchases
B. Sales discount
C. Sales returns and allowance
D. Gross sales
E. None of these
   
The cost of merchandise sold from the following data is as follows:
 
sales $80,000,
beginning inventory $5,000,
purchases $21,800,
purchase discounts $790,
ending inventory $5,100.
 
A. $21,560
B. $20,190
C. $20,910
D. $21,650
E. None of these
   
The asset turnover of Ryan Company is 7.2. The total assets of Ryan are $88,000. Ryan's net sales were:
A. $6,336
B. $63,360
C. $633,000
D. $633,600
E. None of these
   
When each asset is analyzed as a percent of total assets for a single period, this is known as:
A. Horizontal analysis
B. Comparative analysis
C. Ratio analysis
D. Vertical analysis
E. None of these
   
The asset turnover from the following is (round to nearest tenth):
 
·         Gross sales 70,000
·         Sales discount 2,500
·         Sales returns and allowances 8,000
·         Total assets 39,000
 
A. 1.7
B. 1.5
C. 1.9
D. 1.6
E. None of these
   
The total debt to total assets of Logan Company was .71. The total of Logan's assets was $270,000. The amount of total debt is:
A. $146,700
B. $191,700
C. $119,700
D. $461,700
E. None of these
   
Complete the horizontal analysis below:
 

• Year 2 88,338
• Year 1 92,147
• Amount +?
• Percent Change?

 
A. ($3,809), -4.1%
B. $3,809, 4.1%
C. $180,485, 51.1%
D. $8,300, 15%
E. None of these

Chapter Tests             01  02  03  04  05  06  07  08  09  10  11  12  13  14  15  16 17 18  19  20  21  22                 Unit Test 01  02  03  04  05  06        

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