Business and Finance Basics I

1. A simple discount note results in

A. the same interest costs as a simple interest note.

B. interest deducted in advance.

C. lower interest costs than a simple interest note.

D. interest deducted when the note is paid back.

2. (1 + markup percent on cost) × cost equals the

A. markup.

B. cost at retail.

C. selling price.

D. cost at wholesale.

3. A local college bookstore paid a net price of $12,500 for textbooks for the coming semester. The publisher offered a trade discount of 20%. The publisher's original list price was

A. $15,625.

B. $2,500.

C. $15,500.

D. $15,000.

4. Thurston wants to retire in Nevada when he is 80 years of age. Thurston, who is now 55, believes he'll need $400,000 to retire comfortably. To date, he has set aside no retirement money. To get an interest rate of 6% compounded annually, he'll have to invest today. Using the tables found in the textbook, determine how much he must invest.

A. $92,300

B. $96,500

C. $93,200

D. $69,900

5. Carmella wants to attend Bayside Community College. She'll need to have $25,000 six years from today. Carmella is wondering what she'll have to put in the bank today so that she'll have $25,000 six years from now. Her bank pays 6% compounded semiannually

A. 17,535

B. $33,622

C. $33,226

D. $18,950

6. Which of the following is the interest on $6,000 at 6% compounded semiannually for eight years? (Use the table found in the textbook.)

A. $3,682.02

B. $362.82

C. $13,628.20

D. $3,628.20

7. A $40,000 loan at 4% dated June 10 is due to be paid on October 11. Calculate the amount of interest (assuming ordinary interest).

A. $503.00

B. $546.67

C. $2,500.00

D. $105.33

8. Jones Manufacturing sent Blue Company an invoice for equipment with a list price of $10,000. The invoice is dated July 27 with terms of 2/10, EOM. Blue Company is entitled to a 40% trade discount. If the invoice is paid on September 8, how much does Blue pay?

A. $5,880

B. $8,880

C. $8,580

D. $5,550

9. Joyce Meadow pays her three workers $160, $470, and $800, respectively, per week. Calculate what Joyce will pay at the end of the first quarter for (A) state unemployment and (B) federal unemployment. Assume a state rate of 5.6% and a federal rate of .6%. Base is $7,000.

A. $950.64; $67.14

B. $655.64; $97.14

C. $755.64; $81.14

D. $850.64; $91.14

10. The percentage method aids in calculating

A. FIT.

B. FUTA.

C. SUTA.

D. FICA.

11. What's the net price equivalent rate of 9/15/18? A. .36573 B. .36427 C. .63427 D. .63573 12. Convert a 30% markup percent on cost to markup percent on selling price. (Round to the nearest hundredth percent.)

A. 25.08%

B. 13.08%

C. 13.80%

D. 23.08%

13. What's the effective rate of a $30,000 non-interest-bearing, simple discount, 5%, 60-day note?

A. 5.14%

B. 5.04%

C. 5%

D. 6.0%

14. Bill Payne visits his local bank to see how long it will take for $1,000 to amount to $1,900 at a simple interest rate of 12 ½%. Provide Bill with the solution to his problem in years.

A. 7.2 years

B. 6.5 years

C. 10.2 years

D. 12.5 years

15. Jeff Jones earns $1,200 per week. He's married and claims four withholding allowances. The social security rate is 6.2% on $118,500, and Medicare is 1.45%. Each paycheck, his employer also deducts $42.50 for health insurance. What's his net pay? (Calculate FIT by percentage method.)

A. $894.28

B. $980.61

C. $874.28

D. $675.28

16. Bloomingdale's marks up mink coats $3,000. This represents a 50% markup on cost. What's the cost of the coats?

A. $9,000.

B. $6,000.

C. $1,500.

D. $4,500.

17. The effective rate (APY) is the

A. true annual rate.

B. stated rate.

C. nominal rate.

D. true semiannual rate.

18. Given the following information, calculate the amount credited and the outstanding balance. Invoice: $1,000 Terms: 3/10, n/30 Invoice date: May 5 Payment amount: $800 Date paid: May 9

A. $824.00; $176.00

B. $724.74; $275.26

C. $265.26; $624.74

D. $175.26; $824.74

19. Setting a price on perishable items does not include calculating

A. the total selling price.

B. a selling price per day.

C. a selling price per dozen.

D. the total cost.

20. A dining room set lists for $1,500 and carries a trade discount of 40%. Freight charges are $150. Calculate the final price of the dining room set.

A. $2,250

B. $1,050

C. $1,750

D. $3,550