Personal Finance Mid term Exam 1 Fall 2014

.mheducation.com/connect/hmStudentSectionHomePortal.do?sectionId=32937068″ title=”Personal Finance: Fall 2014″>Personal Finance: Fall 2014
Assignment:Midterm Test #1

1.
award:
10
out of
10.00 points

If you borrow $15,500 with a 5
percent interest rate to be repaid in seven equal payments at the end of the
next 7 years, what would be the amount of each payment? (Note: Use the
present value of an annuity table in the.mhhe.com/connect/0077506944/Chapter%201/exhibit_1-3.jpg”>Exhibit
1-3.)(Round
your PV factor to 3 decimal places and final answer to the nearest dollar
amount.)

Amount per payment

$

2.
award:
5
out of
10.00 points

A financial company that
advertises on television will pay you $40,000 now for annual payments of
$7,000 that you are expected to receive for a legal settlement over the next
8 years. Use.mhhe.com/connect/0077506944/Chapter%201/exhibit_1-d.jpg”>Exhibit
1-D.

a.

What is the present value of the
annual payment if you estimate the time value of money at 7 percent?(Round your PV factor to 3 decimal places and
final answer to the nearest dollar amount.)

Present value

$

b.

Would you accept this offer?

No

3.
award:
10
out of
10.00 points

If a person spends $20 a week on
coffee (assume $1,000 a year), what would be the future value of that amount
over 6 years if the funds were deposited in an account earning 3 percent?
Use.mhhe.com/connect/0077506944/Chapter%201/exhibit_1-b.jpg”>Exhibit
1-B.(Round
your FV factor to 3 decimal places and final answer to the nearest dollar
amount.)

Future value

$

4.
award:
0
out of
10.00 points

The document that would
be most useful to track planned spending patterns for the next month is the

All of these.

Cash flow statement.

Balance sheet.

Budget.

None of these.

5.
award:
10
out of
10.00 points

Which of the following
is most correct?

A birth certificate
should be kept in a personal computer system.

W-2s for tax records
belong in a safe deposit box.

Adoption papers belong
in a home file.

Rare coins and stamps
belong in a safe deposit box.

A plan for effective
budgeting belongs in your safe deposit box.

6.
award:
10
out of
10.00 points

Given the following
information, calculate the liquidity ratio:

Liabilities = $-24,500
Liquid assets = $-4,900
Monthly credit payments = $-800
Monthly savings = $-760
Net worth = $-72,500
Current liabilities = $-1,600
Take-home pay = $-2,300
Gross income = $-3,500
Monthly expenses = $-2,040

2.40

-34.78

-33.79

3.06.

-21.71

7.
award:
10
out of
10.00 points

The inability to pay
debts when they are due is called

Liquid assets.

Liabilities.

Net worth.

Cash flow.

Insolvency.

8.
award:
10
out of
10.00 points

Noor Patel is trying to decide
between a $4,600 deduction for tuition and fees and a $2,000 education
credit. Noor is in the 25 percent tax bracket. Which would be the better
option for her?

9.
award:
10
out of
10.00 points

Assume Samantha Jones had the
following itemized deductions.

Donations to church and
other charities

$

3,350

Medical and dental
expenses exceeding 7.5 percent of adjusted
gross income

$

1,990

State income tax

$

1,440

Job-related expenses
exceeding 2 percent of adjusted
gross income

$

2,325

Should she use the itemized
deduction or the standard deduction?

10.
award:
10
out of
10.00 points

Betty Sims has $52,000 of adjusted
gross income and $8,320 of medical expenses. She will be itemizing her tax
deductions this year. The most recent tax year has a medical expenses floor
of 7.5 percent. How much of a tax deduction will Betty be able to deduct?

Tax deduction

11.
award:
10
out of
10.00 points

Using the tax table in.mhhe.com/connect/0077506944/Chapter%203/exhibit_3-5.JPG”>Exhibit
3-5, determine the amount of taxes
for the following situations:

a.

A head of household with taxable
income of $90,851.

Tax amount

$

b.

A single person with taxable
income of $90,851.

Tax amount

$

c.

A married person filing a separate
return with taxable income of $90,852.

Tax amount

$

12.
award:
10
out of
10.00 points

A bank that provides overdraft
protection charges 12 percent for each $100 (or portion of $100) borrowed
when an overdraft occurs.

a.

What amount of interest would the
customer pay for a $340 overdraft? (Assume the interest is for the full
amount borrowed for a whole year.)(Round
your answer to 2 decimal places.)

Interest amount

$

13.
award:
10
out of
10.00 points

A payday loan company charges 4.2
percent interest for a four-week period. What would be the annual interest
rate from that company?(Round your answer to 1 decimal place.)

Annual interest rate

14.
award:
10
out of
10.00 points

With a 28 percent marginal tax
rate, would a tax-free yield of 6.2 percent or a taxable yield of 10.5
percent give you a better return on your savings?

15.
award:
10
out of
10.00 points

A certificate of deposit often
charges a penalty for withdrawing funds before the maturity date. If the
penalty involves two months of interest, what would be the amount for early
withdrawal on a $20,000, 6 percent CD?(Do
not round intermediate calculations. Round your answer to 2 decimal places.)

Amount

$