Exam 4: Managing Money

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. -Kelly earned wages of $87,240, received $4814 in interest from a savings account, and contributed $ 6070 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had Deductions totaling $9049. Find her gross income.

Decide whether the statement makes sense. Explain your reasoning. -Juan won't have to pay any taxes this year. The profit from his business was less than the amount of the standard deduction.

Prorate the given expenses to find the monthly cost. -Linda enrolls for 10 credit-hours for each of two semesters at a cost of $550 per credit-hour (tuition and fees). In addition, textbooks cost $350 per semester. Round your answer to the nearest dollar.

Determine whether the spending pattern described is at, above, or below the national average. Assume that any salariesor wages are after tax. -A single 27-year old woman with a monthly salary of $2700 spends $220 on health care.

Decide whether the statement makes sense. Explain your reasoning. -My share of the federal government's debt is about the same as my annual net income.

Solve the problem. Refer to the table if necessary. -Carla earned wages of $53,687, received $1731 in interest from a savings account, and contributed $ 2999 to a tax deferred retirement plan. She was entitled to a personal exemption of $3900 and had Deductions totaling $7180. Find her gross income.

Provide an appropriate response. -Which of the following will not contribute to maintaining a balanced federal budget?

Answer the question. -You currently drive 360 miles per week in a car that gets 20 miles per gallon of gas. You are considering buying a new fuel-efficient car for $12,000 (after trade-in on your current car)that gets 60 miles per gallon. Insurance premiums for the new and old car are $900 and $600 per year, Respectively. You anticipate spending $1400 per year on repairs for the old car and having no Repairs on the new car. Assume gas costs $3.50 per gallon. Over a five-year period, is it less Expensive to keep your old car or buy the new car? By how much?

For the loan described, calculate the monthly payment and the portions of the payments that go to principal and tointerest during the first 3 months. Use a table. -Calculate the monthly payment and the portions of the payments that go to the principal and to interest during the first 3 months for a student loan of $21,581 with a fixed APR of 7.0% for 15 years.

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. -Bill earned wages of $47,227, received $1837 in interest from a savings account, and contributed $ 3010 to a tax deferred retirement plan. He was entitled to a personal exemption of $3900 and had Deductions totaling $7719. Find his adjusted gross income.

Decide whether the statement makes sense. Explain your reasoning. -When I bought government bonds, I was effectively lending money to the government.

Use the compound interest formula to determine the accumulated balance after the stated period. Assume that interest iscompounded annually. -$16,000 is invested at an APR of 2.3% for 17 years.

Decide whether the statement makes sense. Explain your reasoning. -If I pay off my mortgage in 8 years instead of 16, I will have to pay about twice as much per month since I will be paying the mortgage off in half the time.

Evaluate or simplify the following the expression. - $4 ^ { 5 } \div 4 ^ { 2 }$

Find the annual percentage yield (APY). -A bank offers an APR of $3.25 \%$ compounded quarterly.

Use the compound interest formula for continuous compounding to determine the accumulated balance after the statedperiod. -A $5000 deposit in an account with an APR of 4.8% compounded continuously for 6 years. 143)

Answer the question. -Many insurance companies carry a deductible provision that states how much of a claim you must pay out of pocket before the insurance company pays the remaining expenses. Suppose you have a Car insurance policy with a $500 deductible provision (per claim)for collisions. During a two-year Period, you file claims for $400 and $950. The annual premium for the policy is $650. Determine How much you would pay with and without the insurance policy.

Provide an appropriate response. -The ______ is the actual percentage by which a balance increases in 1 year.

Calculate the amount of interest you'll have at the end of the indicated period. -You invest $11,000 in an account that pays simple interest of 2% for 1 year.

Write the word or phrase that best completes each statement or answers the question.Decide whether the statement makes sense. Explain your reasoning. -The two accounts were offering the same APR, and both accounts had the same annual percentage yield, but one account compounded interest monthly while the other compounded interest quarterly.