Personnel Finance
1. If you compound interest monthly your annual percentage yield will be?
A. The same as your annual percentage yield
B. Greater than the annual percentage yield
C. Lower than the annual percentage yield
D. Will not be affected by annual percentage yield
2. The annual percentage yield indicates:
A. How much interest is earned in a year if allowed to compound
B. the total amount of money invested plus interest
C. The interest rate
D. All of these
3. The frequently interest is compounded, the the yield.
A. More; lower
B. More; higher
C. Less; higher
D. Less; same
4. What is compounding?
A. Depositing money in the bank
B. When interest is added to your initial deposit and you begin to earn interest on interest
C. Your initial deposit
D. The amount of interest you pay on a loan
5. Which example indicates discounting?
A. Looking for less inexpensive options when shopping
B. Figuring out how much money to invest now to have a certain amount in the future
C. Shoplifting
D. All of these
6. What do you call a stream of equal payments received or paid at equal intervals in time?
A. A lump sum
B. An annuity
C. Discounting
D. Future value
7. Which is an adjustment to your adjusted gross income?
A. Interest on Dividends
B. State and Local Taxes
C. Charitable Contribution
D. Student Loan Interest
8. Which of the following statement is true?
A. Gross income includes only wages and tips.
B. Income taxes are calculated based on your adjusted gross income.
C. Standard deductions depend on the tax bracket.
D. Exemptions and Deductions are subtracted from adjusted gross income to find your taxable income.
9. Which of the following reduces your tax bill by the full amount?
A. Tax Deduction
B. Tax Credit
C. Tax Exemption
10. What does FICA stand for?
A. Federal Income Constitution Act
B. Federal Insurance Contribution Act
C. Federal Insurance Corporation of America
11. Which of the following statement is false?
A. FICA applies to wages, tips and self-employment income only.
B. An employer is required to match FICA amounts.
C. Social Security is paid on all income.
D. Medicare is paid on all income.
12. What is the government's "Net Income"?
A. Income or money that has been collected.
B. Expenses or money that has been spent.
C. Occurs when the government has a surplus.
D. Difference between receipts and outlays.
13. Which of the following is not true regarding a deficit?
A. A person's debt.
B. Must cut spending or borrow money to cover deficit.
C. Represents money borrowed in one year.
D. Occurs when outlays exceed receipts.
14. provides coverage for the risk of financial loss due to legal expenses, medical expenses, lost wages, and other expenses associated with injuries caused by an automobile accident for which you were responsible.
A. Collision Insurance
B. Liability Insurance
C. Uninsured motorists protection
D. Comprehensive Insurance
15. An example of risk occurs when an investment does not keep up with prices that are increasing in the overall economy.
A. market
B. interest
C. inflation
D. business failure
16. An investor concerned with a predictable source of income provided by an investment would choose:
A. government bonds.
B. commodities.
C. real estate
D. common stocks.
17. Suppose you have the following deductions: $3200 for interest on home loan, $950 to charitable contribution and $1260 in state income tax. If you filing status entitles you to a $5700 standard deduction,
a) What is your itemized deduction amount?
b) What is the standard deduction amount?
c) Should you itemize your deductions or take the standard deduction?
18. Suppose you are in the 28% tax bracket. How much will your tax bill be reduced if you qualify for a $1500 tax credit?
19. Suppose you are in the 28% tax bracket. How much will your tax bill be reduced if you make a $2400 contribution to charity?
20. Suppose your gross income was $48950 last year. If you spent 26480 in rent and food, 6550 in interest on credit card and loans, 7450 in car expenses and 12800 in taxes.
a. Do you have a deficit or surplus?
b. How much is the deficit or surplus?
c. Suppose you receive a 6% raise next year, how much additional income do you expect next year?
d. How much will your debt be at the end of next year?
21. Suppose Jim is head of household and earned $94,620 in wages last year. He received
$1980 in interest from savings account. If he contributed $2500 in a tax-deferred retirement plan. Jim is entitled to two $3650 exemptions for himself and one child and $8350 in deductions.
A) What is Jim's gross income?
B) What is Jim's adjusted gross income?
C) What is Jim's taxable income?
D) Compute the income taxes owed using the table on the last page.
E) Compute Jim's FICA taxes.
7.65% on first $106,800 of income from wages
1.45% on any income from wages in excess of $106,800
F) What is Jim's overall tax rate? Round to the percent to two decimals.
22. Suppose you invest in an account paying simple interest. You invest $1200 at a rate of 3.5% for 22 years?.
a) How much interest will you earn at the end of the time period?
b) How much will you have in the account at the end of the time period?
23. Suppose you invest in an account paying compound interest annually. You invest $486 at a rate of 9.1% for 2 years.
a) How much will you have in the account at the end of the time period?
b) How much interest will you earn at the end of the time period?
24. Suppose you invest in an account paying compound interest quarterly. If you invest $500 at a rate of 4.9%.
How much will you have in the account at the end of 18 years?
How much interest will you earn at the end of 18 years?
25. Suppose you invest in an account paying 1.8% compound interest monthly. What is the annual percentage yield? Round the percent to 3 decimal places.
26. Suppose you invest in an account compounding interest continuously. If you invest $5005 at a rate of 4.9%.
a) How much will you have in the account at the end of 18 years?
b) How much interest will you earn at the end of 18 years?
c) What is the annual percentage yield?
TAX TABLES
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2009 Marginal
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|
Married Filing
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Married Filing
|
Head of
|
|
|
Single
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Jointly or qualifying widow(er)
|
|
|
|
Tax Rate
|
|
Separately
|
Household
|
|
10%
|
$0 - $8,350
|
$0 - $16,700
|
$0 - $8,350
|
$0 - $11,950
|
|
15%
|
$8,351 - $33,950
|
$16,701 - $67,900
|
$8,351 - $33,950
|
$11,951 - $45,500
|
|
25%
|
$33,951 - $82,250
|
$67,901 - 137,050
|
$33,951 - $68,525
|
$45,501 - 117,450
|
|
28%
|
$82,251 - $171,550
|
$137,051 - $208,850
|
$68,526 - $104,425
|
$117,451 - $190,200
|
|
33%
|
$171,551 - $372,950
|
$208,851 - $372,950
|
$104,426 - $186,475
|
$190,201 - $372,950
|
|
35%
|
$372,951 and more
|
$372,951 and more
|
$186,476 and more
|
$372,951 and more
|
|
Deductions
|
$5,700
|
$11,400
|
$5,700
|
$8,350
|
|
Exemptions
|
$3,650
|
$7,300
|
$3,650
|
$3,650
|