Question 1

Solve.
-Mike and Carrie are in the $28 \%$ marginal tax bracket and claim the standard deduction. How much will their tax bill be reduced if they qualify for a $\$ 830$ tax credit?

Accepted Answer

A)  $\$ 830$ 
B)  $\$ 1062.40$ 
C)  $\$ 500.00$ 
D)  $\$ 232.40$ 
A)  $\$ 830$ 
B)  $\$ 1062.40$ 
C)  $\$ 500.00$ 
D)  $\$ 232.40$

Question 2

Answer the question.
-Stephen sets up an IRA with an APR of 5% at age 26. At the end of each month, he deposits $56 in the account. How much will the IRA contain when he reaches 65? Compare that amount to the
Total amount of deposits made over the time period.

Accepted Answer

A) $80,643.63; this is $54,435.63 more than the total amount of the deposits. 
B) $1534.42; this is $78.42 more than the total amount of the deposits. 
C) $57,471.98; this is $35,071.98 more than the total amount of the deposits. 
D) $57,716.09; this is $43,653.29 more than the total amount of the deposits. 
A) $80,643.63; this is $54,435.63 more than the total amount of the deposits. 
B) $1534.42; this is $78.42 more than the total amount of the deposits. 
C) $57,471.98; this is $35,071.98 more than the total amount of the deposits. 
D) $57,716.09; this is $43,653.29 more than the total amount of the deposits.

Question 3

Provide an appropriate response.
-The bank that pays the highest annual percentage rate (APR)is never the best deal,
no matter what.

Accepted Answer

A) True 
 B)False

Question 4

Provide an appropriate response.
-If you buy an item (such as property or stock)at one price and later sell it at a higher price, the profit is called a capital gain.

Accepted Answer

A) True 
 B)False

Question 5

Decide whether the statement makes sense. Explain your reasoning.
-By 2040 projected Social Security payments will be about $900 billion more than collections
from Social Security taxes. The government will then need to redeem $900 billion in IOUs
from the Social Security trust fund. However, it should be fairly easy for the government
to find the $900 billion by cutting discretionary spending.

Accepted Answer

If these projections are correct, it is

Question 6

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.
-Ken is head of household with a dependent child and a taxable income of $91,691. He also is entitled to a $1000 tax credit. Calculate the amount of tax owed.

Accepted Answer

A) $17,063 
B) $16,425 
C) $17,425 
D) $21,923 
A) $17,063 
B) $16,425 
C) $17,425 
D) $21,923

Question 7

Provide an appropriate response.
-________ outlays are expenses that will be paid automatically unless Congress acts to change them.

Accepted Answer

A) Discretionary 
B) Primary 
C) Mandatory 
D) None of the above 
A) Discretionary 
B) Primary 
C) Mandatory 
D) None of the above

Question 8

Solve the problem.
-Assume you have a balance of $1400 on a credit card with an APR of 19.2%, or 1.6% per
month. You start making monthly payments of $600, but at the same time you charge an
additional $280 per month to the credit card. Assume that interest for a given month is
based on the balance for the previous month. The following table shows how you can
calculate your monthly balance. $$\begin{array} { l c c c c } 
\hline \text { Month } & \text { Payment } & \text { Expenses } & \text { Interest } & \text { New Balance } \
\hline 0 & - & - & - & \$ 1400 \
1 & \$ 600 & \$ 280 & 1.6 \% \times \$ 1400 = \$ 22.40 & \$ 1400 - \$ 600 + \$ 280 + \$ 22.40 = \
2 & \$ 600 & \$ 280 & & \
3 & \$ 600 & \$ 280 & & \
\hline
\end{array}$$ 1102.40
Complete and extend the table to show your balance at the end of each month until the
debt is paid off.

Accepted Answer

\[\begin{array}{l}
\begin{array} { c c c

Question 9

Solve the equation for the unknown.
-$v ^ { 3 } = 27$

Accepted Answer

A)  $v = 81$ 
B)  $v = 19,683$ 
C)  $v = 3$ 
D)  $\mathrm { v } = 9$ 
A)  $v = 81$ 
B)  $v = 19,683$ 
C)  $v = 3$ 
D)  $\mathrm { v } = 9$

Question 10

Solve the problem.
-You need a loan of $120,000 to buy a home. You have a choice between a 30-year fixed rate loan at 3% and an ARM with a first-year rate of 2%. Suppose that the ARM rate rises to 5.5% at the start of
The third year. Neglecting compounding and changes in principal, estimate how much extra you
Will be paying per month during the third year of the ARM over what you would have paid if you
Had taken the fixed rate loan.

Accepted Answer

A) $220 
B) $250 
C) $230 
D) $240 
A) $220 
B) $250 
C) $230 
D) $240

Question 11

Solve the equation for the unknown quantity.
-$y / 16 + 8 = 14$

Accepted Answer

A)  96 
B)  98 
C)  $- 96$ 
D)  $- 98$ 
A)  96 
B)  98 
C)  $- 96$ 
D)  $- 98$

Question 12

Solve the problem.
-Consider an account with an APR of 4%. Find the APY with quarterly compounding, monthly compounding, and daily compounding.

Accepted Answer

A) 19.06%, 19.07%, 19.08% 
B) 4.06%, 4.07%, 4.08% 
C) 13.06%, 14.07%, 14.08% 
D) 1.00%, 0.33%, 4.16% 
A) 19.06%, 19.07%, 19.08% 
B) 4.06%, 4.07%, 4.08% 
C) 13.06%, 14.07%, 14.08% 
D) 1.00%, 0.33%, 4.16%

Question 13

Solve.
-You are in the 25% tax bracket. The apartment rents for $1500 per month. Your monthly mortgage payments would be $1700, of which an average of $1400 per month goes toward interest during the
First year. Determine whether renting or buying is cheaper (in terms of monthly payments)during
The first year. Assume your are itemizing deductions in all cases.

Accepted Answer

A) Renting is cheaper; $1500 per month for renting versus $1150 per month for buying 
B) Buying is cheaper; $1400 per month for buying versus $1500 per month for renting 
C) Renting is cheaper; $1500 per month for renting versus $1700 per month for buying 
D) Buying is cheaper; $1350 per month for buying versus $1500 per month for renting 
A) Renting is cheaper; $1500 per month for renting versus $1150 per month for buying 
B) Buying is cheaper; $1400 per month for buying versus $1500 per month for renting 
C) Renting is cheaper; $1500 per month for renting versus $1700 per month for buying 
D) Buying is cheaper; $1350 per month for buying versus $1500 per month for renting

Question 14

Prorate the given expenses to find the monthly cost.
-Sarah takes courses on a quarter system. Three times a year, she takes 15 credits at a tuition rate of $260 per credit; her fees are $190 per quarter and her room in a shared house costs $130 per week.
Round your answer to the nearest dollar.

Accepted Answer

A) $1586 
B) $2251 
C) $904 
D) $1153 
A) $1586 
B) $2251 
C) $904 
D) $1153

Question 15

Find the monthly interest payments in the situation described. Assume that monthly interest rates are 1/12 of annualinterest rates.
-Ashton maintains an average balance of $1300 on his credit card which carries an annual interest rate of 24%.

Accepted Answer

A) $3120 
B) $312 
C) $260 
D) $26 
A) $3120 
B) $312 
C) $260 
D) $26

Question 16

Solve the problem.
-You need a $95,921 loan. Compute the monthly payment for each of the loan options listed below. Assume that the loans are fixed rate. Option 1: a 30 year-loan at an APR of $8 \%$
Option 2: a 15-year loan at $7 \%$

Accepted Answer

A)  Option 1: $\$ 716.87$
Option 2: $\$ 900.42$ 
B)  Option 1: $\$ 703.83$
Option 2: \$862.17 
C)  Option 1: $\$ 714.05$
Option 2: $\$ 891.03$ 
D)  Option 1: $\$ 695.13$

Option 2: $\$ 836.60$ 
A)  Option 1: $\$ 716.87$
Option 2: $\$ 900.42$ 
B)  Option 1: $\$ 703.83$
Option 2: \$862.17 
C)  Option 1: $\$ 714.05$
Option 2: $\$ 891.03$ 
D)  Option 1: $\$ 695.13$

Option 2: $\$ 836.60$

Question 17

Solve the problem.
-Suppose that you need a loan of $120,000. Find the total cost of all the monthly payments for each of the loan options listed below. Assume that the loans are fixed rate. Round the total cost of each
Loan to the nearest dollar. Option 1: a 30-year loan at an APR of $8 \%$
Option 2: a 15-year loan at an APR of $7 \%$

Accepted Answer

A)  Option 1: $\$ 309,981$
Option 2: $\$ 187,135$ 
B)  Option 1: $\$ 316,987$
Option 2: $\$ 194,146$ 
C)  Option 1: $\$ 245,608$
Option 2: $\$ 186,056$ 
D)  Option 1: $\$ 321,909$

Option 2: $\$ 198,185$ 
A)  Option 1: $\$ 309,981$
Option 2: $\$ 187,135$ 
B)  Option 1: $\$ 316,987$
Option 2: $\$ 194,146$ 
C)  Option 1: $\$ 245,608$
Option 2: $\$ 186,056$ 
D)  Option 1: $\$ 321,909$

Option 2: $\$ 198,185$

Question 18

Solve the problem.
-You have money in an account at an APR of 4% compounded quarterly. To the nearest year, how long will it take for your money to double?

Accepted Answer

A) 24 years 
B) 17 years 
C) 10 years 
D) 14 years 
A) 24 years 
B) 17 years 
C) 10 years 
D) 14 years

Question 19

Solve.
-Determine how much of the total loan payment applies toward principal and how much applies toward interest for a home mortgage of $162,150 with a fixed APR of 4.4% for 30 years.

Accepted Answer

A) $162,150 pays off the principal and $130,215.66 represents interest payments. 
B) $162,150 pays off the principal and $130,127.39 represents interest payments. 
C) $162,150 pays off the principal and $130,292.87 represents interest payments. 
D) $162,150 pays off the principal and $130,164.17 represents interest payments. 
A) $162,150 pays off the principal and $130,215.66 represents interest payments. 
B) $162,150 pays off the principal and $130,127.39 represents interest payments. 
C) $162,150 pays off the principal and $130,292.87 represents interest payments. 
D) $162,150 pays off the principal and $130,164.17 represents interest payments.

Question 20

Decide whether the statement makes sense. Explain your reasoning.
-I will be retiring soon so I need low-risk investments. I'm going to put most of my money
into bonds. The return may not be as high as for stocks but as least there is no chance of
losing any of the principal.

Accepted Answer

No, the statement does not mak

Solve. -Mike and Carrie are in the $28 \%$ marginal tax bracket and claim the standard deduction. How much will their tax bill be reduced if they qualify for a $\$ 830$ tax credit?

Answer the question. -Stephen sets up an IRA with an APR of 5% at age 26. At the end of each month, he deposits $56 in the account. How much will the IRA contain when he reaches 65? Compare that amount to the Total amount of deposits made over the time period.

Provide an appropriate response. -The bank that pays the highest annual percentage rate (APR)is never the best deal, no matter what.

Provide an appropriate response. -If you buy an item (such as property or stock)at one price and later sell it at a higher price, the profit is called a capital gain.

Provide an appropriate response. -________ outlays are expenses that will be paid automatically unless Congress acts to change them.

Solve the equation for the unknown. - $v ^ { 3 } = 27$

Solve the equation for the unknown quantity. - $y / 16 + 8 = 14$

Solve the problem. -Consider an account with an APR of 4%. Find the APY with quarterly compounding, monthly compounding, and daily compounding.

Prorate the given expenses to find the monthly cost. -Sarah takes courses on a quarter system. Three times a year, she takes 15 credits at a tuition rate of $260 per credit; her fees are $190 per quarter and her room in a shared house costs $130 per week. Round your answer to the nearest dollar.

Find the monthly interest payments in the situation described. Assume that monthly interest rates are 1/12 of annualinterest rates. -Ashton maintains an average balance of $1300 on his credit card which carries an annual interest rate of 24%.

Solve the problem. -You need a $95,921 loan. Compute the monthly payment for each of the loan options listed below. Assume that the loans are fixed rate. Option 1: a 30 year-loan at an APR of $8 \%$ Option 2: a 15-year loan at $7 \%$

Solve the problem. -You have money in an account at an APR of 4% compounded quarterly. To the nearest year, how long will it take for your money to double?

Solve. -Determine how much of the total loan payment applies toward principal and how much applies toward interest for a home mortgage of $162,150 with a fixed APR of 4.4% for 30 years.

Decide whether the statement makes sense. Explain your reasoning. -I will be retiring soon so I need low-risk investments. I'm going to put most of my money into bonds. The return may not be as high as for stocks but as least there is no chance of losing any of the principal.

Thinking Critically

Approaches to Problem Solving

Numbers in the Real World

Statistical Reasoning

Putting Statistics to Work

Probability: Living With the Odds

Exponential Astonishment

Modeling Our World

Modeling With Geometry

Mathematics and the Arts

Filters

Exam 4: Managing Money

Solve. -Mike and Carrie are in the 28%28 \%28% marginal tax bracket and claim the standard deduction. How much will their tax bill be reduced if they qualify for a $830\$ 830$830 tax credit?