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 2018 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 2018. ____________________

      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. $12,000

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

      7. $82,900

    13. Tax Rate Single Amount of income to
    be taxed in this range    		 Taxes owed on this part
    of income
    10% $0 to $9,525

    $9,525

    $952.50
    12% $9526 to $38,700

    $29,175

    $3,501.00
    22% $38,701 to $82,500

    $43,800

    $9,636.00
    24% $82,501 to $157,500

    upper number is changed to $82,900

    $400

    $96.00
    32% $157,501 to $200,000
    35% $200,001 to $500,000
    37% Over $500,000
    Total

    $14,185.50
    Standard
    Deduction    		 $12,000