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Financial algebra midterm
Terms in this set (80)
Interest compounded semiannually is compounded 4 times a year
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.
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.
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.
Compound interest earns more than simple interest at the same interest rate because compounding pays interest on the interest earned.
Annual percent yield is higher than the annual percentage rate because APY takes into account the additional interest earned by compounding.
A debit card is a type of charge card where the monthly bill must be paid in full.
Taneeka borrowed $12,000 for a car for 6 years at an APR of 7.25%. Her monthly payment will be $206.03.
The Truth-in-Lending Act protects consumers from harassment from creditors.
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.
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.
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.
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.
Employers are usually charged a flat fee to place classified ads in the newspaper.
Social Security tax is paid on all your income while Medicare tax is paid up to the maximum taxable income amount.
The purpose of worker's compensation is to offer benefits to eligible employees that have become unemployed.
Bruce is paid semimonthly so he receives 24 paychecks a year.
Jim was offered a job as a computer programmer making 65K per year. Another company offered Jim a position earning $1,200 a week. The job with the 65K salary pays more.
Royalty is a percentage paid on the money earned from sales on items such as tickets, books, artwork, and music CDs.
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.
The filing status of head of household is for married taxpayers who have dependents.
Schedule A can be filed with any tax form to itemize deductions for items such as property taxes and charitable contributions paid.
A W-2 is an income statement that lists any money earned from interest.
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.
The long form, also called a 1040, is the only form that a filer can use if they have interest income from dividends, alimony, or prize money.
In a progressive tax system, taxes decrease as income increases.
An exemption is an allowable amount that reduces a person's taxable income. Examples of an exemption are the taxpayer themselves and their dependents.
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.
Tax tables list taxable income in intervals.
The Mancuso family consists of 5 children, two parents, and a live-in great aunt. Mr. Mancuso supports each family member, therefore, he can take 8 exemptions on his 1040 tax form.
Mitchell has a balance of $1,200 in his First State Bank checkin gaccount. He deposits a $387.89 paycheck, a $437.12 dividend check, and a personal check for $250 into his account. He wants to receive $400 in cash. How much will he have in his account after the transaction?
How much principle would you have to deposit to earn $700 simple interest in 1.5 years at a rate of 4%? Round to the nearest hundredth...(It's money!)
Jonathan deposits $6,000 in a savings account that pays 3.2% interest compounded quarterly. What is his balance after one year?
Kristin deposited $9,000 in an account that has an annual interest rate of 4.1% compounded monthly. How much interest will she earn at the end of one month?
Jeff deposits $2,300 at 3.13% interest compounded weekly. What will be his ending balance after one year?
Kings Park Bank is advertising a special 5.08% APR fro CDs. Kevin takes out a one-year CD for $24,000. The interest is compounded daily. Find the APY fro Kevin's account. Round to the nearest hundredth of a percent.
Yurik invests $88,000 in a CD that is locked into a 4.75% interest rate compounded monthly, for seven years. How much will Yurik have in the account when the CD matures?
If you deposit $10,000 at 3.85% interest, compounded daily, what would your ending balance be after three years?
d. $181,952.33 and $31,952.33
Colleen is 15 years from retiring. She opens an account at the Savings Bank. She plans to deposit $10,000 each year into the account, which pays 2.7% interest, compounded annually.
How much will be in the account in 15 years and how much interest will she earn?
Sylvia wants to go on a cruise around the world in 5 years. If she puts $50 into an account each week that pays 2.25% interest compounded weekly, how much will she have at the end of the five-year period?
When his daughter Aliza was born, Mike began saving for her college education. He wanted to have saved about $30,000 by the end of 18 years. How much should Mike deposit into an account that earns 3% interest compounded annually in order to have $30,000? (This is a single deposit NOT periodic.)
Kate wants to install an inground pool in five years. She estimates that cost will be $50,000. How much should she deposit monthly into an account that pays 3% interest compounded monthly in order to have enough money to pay for the pool in 5 years?
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
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, in order to meet her goal? Round to the nearest dollar.
Loretta deposits $350 every quarter into a savings account that earns 4.5% interest compounded quarterly. What is the balance after 7 years?
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?
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?
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 McQuire's account?
c. Certificate of Deposit
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?
Monique purchases a $5100 dining room set. She can't afford to pay cash, so she uses the installment plan, which requires an 18% down payment. How much is the down payment?
b. 16 months
Joe wants to purchase an electric keyboard. The price of the deyboard at Macelli's, with tax is $2344. He can save $150 per month. How long will it take him to save for the keyboard? Round to the nearest month.
Lisa purchases a professional racing bicycle that sells for $3000, including tax. It requires a $200 down payment. The remainder, plus a finance charge, is paid back monthly over the next two and a half years. The monthly payment is $111.75. What is the finance charge?
What is the monthly payment for a $3200 five-year loan with and APR of 9%?
Mia borrows $66,000 for four years at an APR of 7.25%. What is the monthly payment?
The total of monthly payments for a 3-year loan is $19,668.60. The APR is 7.75%. How much money was originally borrowed?
What is the finance charge for a $7000, two-year loan with a 6.75% APR?
Use the Monthly Payment Formula. Jeanne has a $14,800, three and a half year loan with an APR of 8.56%. What is the monthly payment?
a. $208.48 and $5017.60
What is the monthly payment for a 10-year, $20,000 loan at 4.625% APR? What is the total interest paid on this loan?
b. 4 years
Mantago wants to borrow $10,000 to buy a used car. He examined his budget and decides 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?
c. Fair Credit Reporting Act
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?
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. What will his total interest be?
What is the monthly periodic rate on a loan with an APR of 18.6%?
Danny just answered a help-wanted ad. The ad states that the job pays $33K annually. What would Danny's monthly salary be if he gets this job?
Sean is paid biweekly. His annual salary is $52,699. What is his biweekly salary to the nearest cent?
d. 27 hours
Michael earns $12 per hour. He regularyly works 40 hours per week. How many overtime hours would he have to work in a week for his overtime pay to be greater than his regular gross pay? (He is paid time-and-a-half for overtime pay.)
Oscar sells Internet access subscriptions by telephone. He receives 12% of the first $1000 and 15% on the balance over $1000. Last month he sold $7500 worth of Internet access subscriptions. What was his commission?
Ruth contributes 21% of the total cost of her individual health care. This is a $65.80 deduction from each of her biweekly paychecks. What is the total value of her individual coverage for the year?
In a year when the maximum income for Social Security was $106,800, Bart worked at two jobs. In one job he earned $98,554.90 and the other job he earned $40,568.13. Both of his employers took out Social Security tax. As a result, Bart paid excess Social Security tax, and the government must return some of it to him. How much does the governement owe him for excess Social Security paid?
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?
b.Health benefits and compensation for workers who get injured on their jobs.
What is Medicare?
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?
Catalina works part-time at a bakery earning $7.50 an hour. In the last 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?
b. minimum wage
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?
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?
b. flexible spending account
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?
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?
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?
d. The tax credit is subtracted from the tax owed,
not taxable income.
Conrad and Jill have a taxable income of $63,670. They discovered that they are able to receive a $1,500 tax credit for purchasing an energy efficient furnace. How will this tax credit affect their taxes?
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?
d. The 1099 income is not reported to the IRS
while the W-2 income is reported.
Which statement is NOT true about the differences between the income on a W-2 and that on a 1099 form?
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