Finance Unit

Finance Test Review

  1. In 1950 the average annual salary of an American worker was $2,876. According to the U.S. Census Bureau, the median household income in 1998 was $38,885, about 13 times the salary of a worker from 1950. What was the percent increase in the average annual salary?

    2. There was a 1252% increase in the average annual salary.

  2. Manuel found a wrecked Trans-Am that he could fix. He bought the car for 65% of the original price of $7200. What did he pay for the car? (Round to nearest dollar)

    3. Manuel paid $4680 for the car.

  3. You borrow $700 from your dad and promise to pay him back in 2 years with interest. You agree to pay 4% simple interest. How much total will you have to pay your dad back?

    4. You paid $756 to your dad.

  4. You receive $3000 as a graduation gift from your rich uncle. You decide to invest the money in a mutual fund that earns an average APR of 6.75% compounded monthly. How much will you have in the mutual fund in 25 years?

    5. You have $16,141.34 in the fund in 25 years.

  5. How much would you have to deposit today to accumulate $50,000 in 35 years if you earn 5.5% interest compounded quarterly?

    6. You must deposit $7,390.07 today to accumulate $50,000 in 35 years.

  6. You realize the importance of starting to save at an early age. So at age 20, you meet with a financial advisor and set up automatic monthly deposits of $75 into an investment account. If the account earns 8.3% interest, how much will you have in the account when you are 45 years old?

    7. You will have $74,904.48 in the account when you are 45.

  7. You can afford a monthly house mortgage payment of $750. With a 15-year loan at 4% APR, how expensive a house can you afford to buy?

    8. You can afford a $101,394.11 house.

  8. Greg got himself into trouble with credit card debt. He owes $3900 on his credit card. If he never uses his credit card again, but pays off his debt in 5 years at 19% interest, what are his monthly payments to the credit card company?

    9. Greg's monthly credit card payments are $101.17.

  9. The average price for a gallon of gasoline in the US was $3.01 in October of 2010. In June of 2019 it was $2.50. What was the percent decrease in the average price of a gallon of gas?

    10. The average price for a gallon of gas decreased by 16.9%.

  10. Allison works 40 hours a week at a minimum wage job ($7.25 an hour). Her cell phone plan costs $45 each month. On an annual basis what PERCENT of her income does Allison spend on her phone? Assume she works 52 weeks a year.

    11. Allison spends 3.6% of her income on her cell phone.

  11. Find the monthly cash flow.

    12. Income Expenses
    Part-time job: $800/month Rent: $450/month
    Scholarship: $5250/year Tuition and Fees: $4176/year
    Tax Refund: $1200/year Groceries and Incidentals: $125/week
    Phone: $35/month

    There is a positive monthly cash flow of $4.50.

  12. In 2021 you earned $100,000 at your job. Your investments earned you $4500 in interest for the year. You paid $9600 into a tax-deferred retirement account. Find the amount of Social Security/Medicare taxes and federal income taxes that you must pay.
    1. Wages: ____________________

      2. $100,000

    2. You must pay 7.65% of your wages for Social Security and Medicare taxes. Calculate your Social Security/Medicare taxes for 2021. ____________________

      3. $7,650

    3. Gross Income (Wages + Interest): ____________________

      4. $104,500

    4. Adjusted Gross Income (Wages + Interest – Tax-deferred contributions): ____________________

      5. $94,900

    5. Amount of Standard Deduction: ____________________

      6. $12,550

    6. Taxable Income (Adjusted Gross Income – Standard Deduction): ____________________

      7. $82,350

    13. Tax Rate Single Amount of income to
    be taxed in this range    		 Taxes owed on this part
    of income
    10% $0 to $9,950

    $9,950

    $995
    12% $9,951 to $40,525

    $30,575

    $3,669
    22% $40,526 to $86,375
    upper number is changed to $82,350

    $41,825

    $9,201.50
    24% $86,376 to $164,925
    32% $164,926 to $209,425
    35% $209,426 to $523,600
    37% Over $523,600
    Total

    $13,865.50
    Standard
    Deduction    		 $12,550

  13. You flip a fair coin. What is the probability of getting heads? \(\frac12\)
  14. Sam is going to call one person from his contacts at random. He has 40 total contacts. 22 of those contacts are people he met at summer camp. What is the probability that he calls a person from camp? \(\frac{11}{20}\)
  15. You randomly draw a marble from a bag of marbles that contains 3 blue marbles, 4 green marbles, and 5 red marbles. What is the probability that you draw a green marble? \(\frac13\)