4A: Taking Control of your Finances
4B: The Power of Compounding
4C: Savings Plans and Investments
4D: Loan Payments, Credit Cards, and Mortgages
4E & 4F: Income Tax & The Federal Budget
100
A _____ is when your expenses do not exceed your income.
What is balanced budget
100
Both banks were paying the same annual percentage rate, but one had a higher annual percentage yield than the other. Does this statement make sense?
Yes because the banks can have a different number of compounding periods, which results in different APYs
100
True or False: The total return is the percentage change in the investment value. The annual return is the annual percentage yield that would give the same overall growth over Y years. The formula for annual return is [(A-P)/P]*100
False. The formula for annual return is [(A/P)^(1/y)]-1
100
Suppose you pay only the interest on a loan. Will the loan ever be paid off?
No, if only the interest, the paid principal never decreases.
100
True or False: Both exemptions an deductions are subtracted from your adjusted gross income; however, exemptions vary from person to person but, deductions are fixed per person.
False. Exemptions are fixed per person, deductions vary from person to person.
200
You maintain an average balance of $1595 on your credit card, which carries an annual interest rate of 13.2%. What is the monthly interest payment?
$17.55
200
You deposit $4500 in an account that has simple interest and an annual interest of 4.2% for 15 years. How much will you have at the end of 15 years?
$7335
200
Does the following statement make sense: My Financial advisor showed me that I could reach my retirement goal with deposits of $249 per month and an average return rate of 7%. But, I don't want to deposit that much of my paycheck, so I'm going to reach the same goal by getting an average annual return rate of 15% instead.
It does not make sense, because you cannot choose your own annual return rate.
200
Does this statement make sense: If I make only the minimum required payments on my credit card balance each month, because that way I'll have more of my own money to keep.
No because it takes a very ling time to pay off a credit card loan if only the minimum payment are made. This results in much more interest being paid.
200
If 2 people are both single and have no children and have the same total (gross) income, do they pay the same amount in taxes?
No, because 2 people may not have the same adjusted gross income or taxable income.
300
Suzanne's cell phone bill is $65 per month, and she spends $215 per year on student health insurance. On an annual basis, the money spent on her cell phone bills is ___ % of the money spent on student health insurance. (round to the nearest percent)
363%
300
You invest $8500 at an annual percentage rate of 5.7% for 7 years. If interest is compounded annually, what is the amount after 7 years? (round to the nearest cent)
12,529.79
300
Does the following statement make sense: If interest rates stay at 7% APR and I continue to make monthly $55 deposits into my retirement plan, I should have at least $35,000 saved when I retire in 23 years.
Yes, it does make sense. I will have $37,520.66 when I retire.
300
Consider a home mortgage of $125,000 at a fixed APR of 4.5% for 30 years. What is the monthly payment?
$633.36
300
Does the following statement make sense: Bob and Sue were planning to get married in December of this year, but they postponed their wedding until January when they found it would save them money in taxes.
Yes because they save twice as much money if they file as single due to the marriage penalty.
400
Rick buys a new plasma TV for $1950. He made a down payment of $375 and financed the rest though the store. However, he was unable to make the first monthly payment and now pays 5.5% interest per month on the balance. What is Rick's monthly interest payment? (round to nearest cent)
$86.63
400
A bank offers an annual percentage rate of 4.2% compounded every five days. What is the annual percentage yield? (round final answer to two decimal places)
4.29%
400
Five years after buying 50 shares of XYZ stock for $40 per share, you sell the stock for $3200. What are the total and annual returns for this investment. (round the final answer to one decimal place as needed)
60.0% and 9.9% respectively
400
Suppose on January 1st, you have a balance of $3,100 on a credit card whose APR is 18%. You want to pay this off in 1 year and assume you have no more addition charges to the car after January 1st. When the card is paid off, how much will you have paid since January 1st?
$3,410.50
400
A woman is in the 35% tax bracket and itemizes her deductions. How much will her tax bill be reduced if she qualifies for a $1400 tax credit?
$1400
500
The cost of buying a new car is $25,000. At the end of a three year period, the car can be sold for $14,500. Leasing the same car requires you to make a down payment of $1,250 and monthly payments of $250. At the end of a three year period, the leased car has a residual value of $14,500. Is it less expensive to buy or to lease?
Lease
500
You deposit $25,000 in an account with an annual percentage rate of 3.7%. If interest is compounded continuously, what will be the annual percentage yield?
3.77%
500
Your goal is to create a college fund for your child. Suppose you find a fund that offers an APR of 4%. How much should you deposit monthly to accumulate $89,000 in 14 years? (round final answer to the nearest cent as needed.)
$396.06
500
Consider a student loan of $7,500 at a fixed APR of 6% for 4 years. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest?
88.7% and 11.3% respectively
500
Suppose your gross income last year was $40,000. Your expenditures were as follows: $20,000 for rent & food $2,000 for interest on your credit cards and student loans $9,000 for entertainment and miscellaneous expenses $8,000 in taxes Was there a deficit or a surplus?
A $1,000 surplus
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