Topic: Finance Multiple Choice Questions

  1. Don made deposits of $500 at the end of each year for 8 years. The rate is 8% compounded annually. Using the tables found in the textbook, calculate the value of Don’s annuity at the end of the eight years. (This questions requires a table which I will attach at Q1)
  1. $4,318.30
  2. $2,873.30
  3. $5,318.30
  4. $2,837.03
  • Alice wants to know how much she’ll have to invest today to receive an annuity of $10,000 for six years if interest is earned at 7% annually. She’ll make all of her withdrawals at the end of each year. How much should she invest?
  1. $47,665
  2. $55,800
  3. $45,000
  4. $58,333
  • A new piece of equipment costs $18,000 with a residual value of $600 and an estimated useful life of five years. Assuming twice the straight-line rate, the book value at the end of Year 2 using the declining -balance method is
  1. $11,520
  2. $18,000
  3. $6,480
  4. $7,200
  • When are annuity due payments made?


a) monthly

b) at the beginning of the period

c) at the end of the period

d) yearly

  • Which of the following methods is not based on the passage of time?
  1. Straight-line method
  2. None of these
  3. Declining -balance method
  4. Units-of-production method
  • Ted Williams made deposits of $500 at the end of each year for eight years. The rate is 8% compounded annually. What the value of Ted’s annuity at the end of eight years? (This also uses a table from the book which I will mark at Q6 and attach)
  1. $5,318.30
  2. $2,837.03
  3. $4,318.30
  4. $2,873.30
  • In calculating the daily balance, cash advances are
  1. Sometimes added in
  2. Always added in
  3. Sometimes subtracted out
  4. Always subtracted out
  • Andrew invests $9,000 at the end of each year for 20 years. The rate of interest Andrew gets is 8% annually. Using the tables found in the textbook, determine the final value of Andrew’s investment at the end of the twentieth year on this ordinary annuity. (I will attach the table and mark it at Q8)
  1. $411,858.00
  2. $411,588.00
  3. $88,632.90
  4. $88,362.90
  • Bayani is charged 2 points on a $120,000 loan at the time of closing. The original price of the home before the down payment was $140,000. How much do the points in dollars cost Bayani?
  1. $2,800
  2. $8,200
  3. $2,400
  4. $4,200
  1. Stu Reese has a $150,000   7 ½ % mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding of
  1. $149,927.40
  2. $149,910.40
  3. $72.60
  4. $149,729.40
  1. Marc bought a new split level for $200,000. Marc put down 30%. Assuming a rate of 11 ½ % on a 30-year mortgage, use the tables found in the textbook to determine Marc’s monthly payment. (I will attach the tables calling it Q11)
  1. $1,423.80
  2. $1,367.80
  3. $1,982.00
  4. $1,387.40
  1. Amount financed is equal to cash price _________ down payment.
  1. Plus
  2. Divided by
  3. Times
  4. Minus
  1. What does an amortization schedule show?
  1. The portion of payment broken down to interest and schedule
  2. The increase in loan outstanding
  3. The balance of interest outstanding
  4. The increase to principal
  1. Bill’s Pizza has an asset turnover of 3.5. The total assests of Bill’s were $95,000. The net sales of Bill’s Pizza is.
  1. $271,428.50
  2. $33,250.00
  3. $332,500.00
  4. $27,142.85
  1. Given a mortgage of $48,000 for 15 years with a rate of 11%, what are the total finance charges? (Use Table 15.1 in the textbook for the factor) I will attach the table and name is Q15.

a)$545.76

b) $5,023.68

c) $54, 576

d) $50,236.80

  1. The reduction of principal each month is equal to the payment _______ the interest.
  1. Times
  2. Minus
  3. Plus
  4. Divided by
  1. Jorgen made deposits of $250 at the end of each year for 12 years. The rate received was 6% annually. What’s the value of the investment after 12 years?
  1. $4, 217.48
  2. $2,028
  3. $3,000
  4. $4,200
  1. An annuity due can use the ordinary annuity table if one extra period is added and
  1. One payment is added to total value
  2. Two payments are added to total value
  3. One payment is subtracted from total value
  4. Three payments are subtracted from total value
  1. When each asset is analyzed as a percent of total assets for a single period, this is known as
  1. Horizontal analysis
  2. Comparative analysis
  3. Vertical analysis
  4. Ratio analysis
  • The present value of an ordinary annuity
  1. Is a lump sum
  2. Tells how much money one needs to invest in the future
  3. Indicates how much money needs to be invested today
  4. Can only be calculated manually
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