Exam 4: Managing Money

Solve the problem. -Budget Summary for the Wonderful Widget Company (all amounts in thousands of dollars) Total Receipts 2001 2002 2003 2004 Outlays \ 854 \ 908 \ 950 \ 990 Operating 525 550 600 600 Employee Benefits 200 220 250 250 Security 275 300 320 300 Interest on Debt Total Outlays 1000 1082 1196 1197 Surplus/Deficit -146 -174 -246 -207 Debt (accumulated) Assume that , for 2005, total receipts are $1,064,603, operating expenses are $507,311, employee benefits are $159,259, security costs are $136,647, and interest on debt is $63,000. Calculate the Year-end accumulated debt.

Use the compound interest formula for compounding more than once a year to determine the accumulated balance afterthe stated period. -$5000 deposit at an APR of 5% with monthly compounding for 6 years

Solve. -Calculate the monthly payment for a loan of $13,000 at a fixed APR of 7% over a period of 3 years.

Provide an appropriate response. -If net income is positive, the budget has a surplus.

Write the word or phrase that best completes each statement or answers the question.Decide whether the statement makes sense. Explain your reasoning. -The bank paid an annual interest rate (APR)of 7% but at the end of the year my account balance had grown by only 6.9%

Solve the problem. Refer to the table if necessary. 2013 Marginal Tax Rates, Standard Deductlons, and Exemptlons** " Each higher marginal rate begins where the prior one leaves off. For example, for a single person, the $15 \%$ marginal rate affects income starting at $\$ 8925$ , which is where the $10 \%$ rate leaves off, and continuing up to $\$ 36,250$ . " This table ignores the effects of (i) exemption and deduction phase-outs that apply to high-income taxpayers and (ii) the alternative minimum tax (AMT) that affects many middle-and high-income taxpayers. -Caitlin is single and earned wages of $32,988. She received $300 in interest from a savings account. She contributed $479 to a tax-deferred retirement plan. She had $530 in itemized deductions from Charitable contributions. Calculate her gross income.

Solve the problem. Refer to the table if necessary. -Jim earned wages of $89,118, received $5002 in interest from a savings account, and contributed $ 6342 to a tax deferred retirement plan. He was entitled to a personal exemption of $3900 and had Deductions totaling $8797. Find his adjusted gross income.

Provide an appropriate response. -A _______ represents a promise of future cash.

Answer the question. -You put $422 per month in an investment plan that pays an APR of 3%. How much money will you have after 25 years? Compare this amount to the total amount of deposits made over the time Period.

Provide an appropriate response. -Which of the following will contribute to an increased federal debt?

Assume you have a balance of $3200 on your credit card that you want to pay off. Calculate your monthly payment andtotal payment under the given conditions. Assume you make no additional charges to the card. -The credit card APR is 19% and you want to pay off the balance in 1 year.

Solve the problem. -Suppose the government has a unified net income of $70 billion, but was supposed to deposit $170 billion in the Social Security trust fund. What was the on-budget surplus or deficit?

Provide an appropriate response. -A full-service broker offers advice based on in-depth research.

Solve the problem. -Suppose you have a student loan of $100,000 with an APR of 7% for 25 years. If you decide you would like to pay off the loan in 10 years instead of 25, how much more will you have to pay each Month?

Provide an appropriate response. -_______ is interest paid both on the original principal and on all interest that has been added to the original principal.

Decide whether the statement makes sense. Explain your reasoning. -Paul has about $1800 available for all his personal expenses combined. He figures that he can easily afford to pay $900 in rent.

Provide an appropriate response. -If you sell a stock for more than you paid for it, you have a __________.

Solve the problem. -Suppose that the federal debt increases at an annual rate of 3% per year. Use the compound interest formula to determine the size of the debt in 20 years. Assume that the current size of the debt is $17 Trillion.

Provide an appropriate response. -What is the general form of the compound interest formula for interest paid once a year?

Decide whether the statement makes sense. Explain your reasoning. -Paul figures that at today's prices he can live on $40,000 per year. Currently, banks are offering an APR of 8%. So he says "if I build a retirement fund that gives me $500,000 by the time I retire, then if the APR remained at 8% for ever, and if I lived for ever, I could live on the interest alone for ever. That's because 8% of $500,000 is $40,000."