Accounting and Finance Mathematics
Chapter Exam Questions
Course Introduction
Accounting and Finance Mathematics introduces students to the fundamental quantitative techniques and mathematical tools used in the fields of accounting and finance. The course covers essential topics such as the use of algebraic methods in financial problem solving, time value of money, interest rate calculations, annuities, amortization, and financial statement analysis. Students will also develop skills in constructing and interpreting financial models, applying statistical methods to financial data, and understanding how mathematical concepts inform decision-making processes in accounting and finance. By the end of the course, students will be better equipped to analyze financial information and solve real-world accounting and finance problems using mathematical reasoning.
Recommended Textbook
Contemporary Business Mathematics with Canadian Applications 9th Edition by
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Page 2
S. A. Hummelbrunner
Chapter 1: Review of Arithmetic
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Sample Questions
Q1) Change 0.25% into a decimal.
Answer: 0.25/100=0.0025
Q2) Change 0.035 into a percent.
Answer: 0.035*100=3.5%
Q3) Your gross annual pay is $19 163. Employment insurance premiums are deducted at a rate of 2.25% and Canada Pension Plan premiums are 3.75% based on total earnings. You pay income taxes at a rate of 17% on all amounts over $8131. What is your Net Pay for the year?
A) $15137.78
B) $17137.78
C) $16317.78
D) $16137.78
E) $18237.78
Answer: D
Q4) Last week Dana worked 46 hours. For the regular workweek of 40 hours she is paid $12.40 per hour, and for every hour over 40 hours she is paid at time and one-half regular pay. How much did she earn last week?
Answer: For the first 40 hours = 40(12.40) = 496.00 For the next 6 hours = 6(12.40 + 6.20) = 111.60
The total = 496.00 + 111.60 = $607.60
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Chapter 2: Review of Basic Algebra
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Sample Questions
Q1) Solve: 4x - 8 - 19x = 210 + 7x - 4
Answer: 4x -8 - 19x = 210 + 7x - 4
-15x - 8 = 206 + 7x
-8 - 206 = 7x + 15x
-214 = 22x
-9.7272727 = x
LS: = 4(-9.7272727) - 8 - 19(-9.7272727)
= -38.909091 - 8 + 184.81818 = 137.90909
RS: = 210 + 7(-9.7272727) - 4
= 206 - 68.090909 = 137.90909
Q2) Evaluate: ln 60
Answer: ln 60 = 4.094344562
Q3) Solve: 10(3 - x) + 2(x - 2) = 6(2x - 2)
Answer: 10(3 - x) + 2(x - 2) = 6(2x - 2)
30 - 10x + 2x - 4 = 12x - 12
-10x + 2x - 12x = -12 - 30 + 4
-20x = -38 x = 1.9
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Chapter 3: Ratio, Proportion, and Percent
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Sample Questions
Q1) The Bank of Nova Scotia reduced its annual lending rate from 11% to 8.75%. What is the percent reduction in the lending rate?
Answer: Reduction = 11% - 8.75% = 2.25%
Rate = 11ea8930_32c9_4d2a_b375_e14878eb4088_TB4213_11 = .204545 = 20.4545%
The reduction in rate is 20.4545%.
Q2) You sell your house at 95.7% of the list price. What was the amount of sales commission if the commission percentage is 3.75% and the list price of the house was $182 500?
A) $6449.47
B) $6449.74
C) $6149.47
D) $6149.74
E) $6549.47
Answer: E
Q3) $14.35 is 1/3% of what amount?
Answer: 14.35 = 11ea8930_32c1_abca_b375_69fa3cd70f64_TB4213_11 of x 14.35 = 11ea8930_32c1_abcb_b375_5db919d5e4cf_TB4213_11 $4305.00 = x
Q4) $170 is what percent of $80?
Answer: R = 11ea8930_32c0_9a52_b375_ffc0d835b4fb_TB4213_11 = 212.5%
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Chapter 4: Linear Systems
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Sample Questions
Q1) Solve graphically: y = -x - 5 and x - y = 6
Q2) Solve the system of equations: 4x + 3y = 36 2x + 9y = -18
Q3) Solve the system of equations: x + 7y = 0 x + 4y = 8
Q4) Solve the system of equations: 6x + 5y = 30 4x - 3y = 24
Q5) Solve graphically: x = y, 2y = x - 200
Q6) Solve the system of equations: 28 - 7x = 4y 36 - 4y = 3x
Q7) Graph: y = 3 - 2x
Q8) Solve graphically: 2x + 3y = -4 and x - 2y = 5
Q9) Graph: x = -4
Q10) Find the slope and y-intercept: 4.5x + 9y = 81
Q11) Solve the system of equations: 0.8x + 0.3y = 1.3
0.3x + 0.2y = 1.1
2.9x + 4.7y = 106 Page 6
Q12) Solve the system of equations: 6.6x + 3.5y = 110
Q13) Graph: 3x + 4y = 12
Q14) Solve graphically: 4x + 3y = 12 and 3x - 4y = -24
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Chapter 5: Trade Discount, Cash Discount, Markup, and Markdown
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Sample Questions
Q1) A merchant buys an item listed at $69.00 less 34% from a distributor. Overhead is 44% of cost and profit is 37.5% of cost. For how much should the item be retailed?
Q2) The Amusement Park bought 1200 t-shirts auctioned off en bloc for $6600.00. This means that each t-shirt has the same cost. On inspection, the t-shirts were classified as normal quality, seconds, and substandard. The 640 normal quality t-shirts were sold at a markup of 95% of cost, the 330 t-shirts classified as seconds were sold at a markup of 35% of cost, and the t-shirts classified as substandard were sold at 47% of their cost. What was the unit price at which each of the three classifications was sold?
A) $10.73, $7.43, $2.59
B) $10.73, $1.93, $2.59
C) $10.73, $7.43, $8.09
D) $9.75, $7.43, $2.59
E) $10.73, $2.59, $1.93
Q3) Sean's Hardware Supplies sells a snowblower for $750.99. The markup is 70% of cost.
a) How much does the store pay for this snowblower?
b) What is the rate of markup based on selling price?
Q4) A 47% discount allowed on an article amounts to $3.57. What is the net price?
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Chapter 6: Break-Even and Cost-Volume-Profit Analysis
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Sample Questions
Q1) A local health care facility has fixed costs per month of $187 400. They also have patient costs of $4.15 per day per patient for linen and cleaning, medication costs are $23.32 per patient per day and lab tests cost $75.61 per patient per day. The government is considering allowing the health care facility to charge each patient and amount to recover his or her costs and to make a "profit" of $15 000 per month. The health care facility averages 690 patients per month. The VP- Finance for the facility wants you to calculate the daily rate charge per patient. Your answer is:
A) $462.92
B) $396.41
C) $345.73
D) $284.51
E) $455.21
Q2) Trevor, the new owner of the vehicle accessory shop is considering buying sets of winter tires for $299 per set and selling them at $520 each. Fixed costs related to this operation amount to $3 250 per month. It is expected that 18 sets per month could be sold. How much profit will Trevor make each month?
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Chapter 7: Simple Interest
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Sample Questions
Q1) In how many months will $4100.00 earn $192.29 interest at 7.5%?
Q2) Calculate the amount of interest if $2000.00 is invested at 6% for 200 days.
A) $65.75
B) $120.00
C) $54.25
D) $6575.34
E) $240.00
Q3) How many days did it take for your investment of $4300 to accrue $147 in interest at a rate of 8.12%?
A) 163.36 days
B) 135.36 days
C) 157.36 days
D) 153.67 days
E) 163.67 days
Q4) A loan of $4100 is to be repaid in three equal installments due 110, 197, and 311 days respectively after the date of the loan. If the focal date is the date of the loan and interest is 6.89% p.a., find the size of the installments.
Q5) In how many months will $5 000 grow to $6 000.00 at 9.5% p.a.?
Q6) Compute the amount of interest for $500.00 at 8.75% from June 30 to December 31.
Page 10
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Chapter 8: Simple Interest Applications
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Sample Questions
Q1) Tracey bought a 182-day Government of Canada treasury bill at the price to yield an annual rate of return of 4.68%.
a) What was the price paid by Tracey if the T-bill has a face value of $100 000?
b) Later the same day, Tracey sold this T-bill to a large corporation to yield 4.48%. What was Tracey's profit on this transaction?
Q2) Find the present value of a seven-month note for $3 940 dated April 1 with interest at 7.45% if money is worth 6%, on August 15?
Q3) Find the present value and the amount of discount for a four-month non-interest-bearing note for $9 180 issued December 2, 2014, if money is worth 7.2% on February 28, 2015.
Q4) A promissory note has a face value of $6 000 and it has a date of issue of June1 this year. The term is for 6 months. The rate of interest is 8.00%. What is the maturity value of the note?
A) $6242.60
B) $6246.60
C) $6200.60
D) $6248.60
E) $6244.60
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Page 11
Chapter 9: Compound Interest - Future Value and Present
Value
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Sample Questions
Q1) Accumulated $1720.00 at 8.4% p.a. compounded monthly from March 1, 2011, to July 1, 2013, and thereafter at 8.88% p.a. compounded quarterly. What is the amount on April 1, 2015?
Q2) A ten-year note for $2220.00 bearing interest at 6.6% compounded monthly is discounted at 8.92% compounded quarterly four years and four months before maturity. Find the proceeds of the note.
Q3) A $17 200 debt will accumulate for six years at 11.6% compounded semi-annually. For how much will the debt sell four years after it was incurred if the buyer of the debt charges 9% compounded quarterly?
Q4) An obligation of $5150.00 due in 2.5 years is to be settled by four equal payments due today, nine months from now, 21 months from now, and 27 months from now, respectively. What is the size of the equal payment at 8.88% p.a. compounded quarterly?
Q5) Loans of $1600.00, $8300.00, and $12100.00 are due now, in four years, and in seven years respectively. What is the equivalent single sum of money due three and a half years from now if interest is 10.8% compounded monthly?
Q6) An eleven-year promissory note discounted after six years at 9.2% compounded quarterly has a maturity value of $71500. Find the proceeds.
Page 12
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Chapter 10: Compound Interest - Further Topics
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Q1) A financial obligation requires the payment of $1000.00 in nine months, and $500.00 in twelve months. When can the obligation be discharged by a single payment of $1700.00 if interest is 12% compounded quarterly?
Q2) A five-year, $4500.00 promissory note with interest at 7.5% compounded semi-annually was discounted at 8% compounded quarterly yielding proceeds of $6150.00. How many months before the due date was the discount date?
Q3) At what nominal rate of interest compounded quarterly will $2000.00 earn $400.00 interest in three years?
Q4) How long did it take for $1635 to increase to $2310 if the investment earned interest at a rate of 8.08% compounded quarterly (give your final answer in years and months, e.g., 3 years and 7.23 months)?
A) 7 years 7.69 months
B) 4 years .64 months
C) 3 years 4.79 months
D) 4 years 3.84 months
E) 8 years 1.69 months
Q5) What is the nominal rate of interest compounded semi-annually which is equivalent to an effective rate of 5.89%?
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Chapter 11: Ordinary Simple Annuities
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Sample Questions
Q1) Note: The calculations for this question were done using Excel's RATE function. What is the effective annual rate of interest on a loan of $9200.00 repaid in semi-annual installments of $810.00 in nine years?
Q2) How many monthly payments will it take for $1000.00 deposited at the end of each month to amount to $50000.00 at 9% compounded monthly?
Q3) If a loan was repaid by ordinary yearly payments of $2000.00 in five years at 9.00%, compounded yearly, how much interest was paid?
Q4) What nominal rate of interest is earned by monthly deposits of $560.00 made for 6 years if the balance just after the last deposit is $52 700.00?
Q5) Kam expects to retire in 22 years. Beginning one month after his retirement he would like to receive $590.00 per month for 25 years. How much must he deposit into a fund today to be able to do so if the rate of interest on the deposit is 6.12% compounded monthly?
Q6) What is the size of end-of-month monthly deposits which will accumulate to $122 200.00 after six years if interest is 5.7% compounded monthly?
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Chapter 12: Ordinary General Annuities
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Sample Questions
Q1) What is the accumulated value of deposits of $2000.00 made at the end of every year for three years if interest is 6.00% compounded quarterly?
Q2) If a student loan was repaid by monthly payments of $800.00 in 5.0 years at 8.00% compounded yearly, how much interest was paid?
Q3) You make 4 semi-annual deposits starting at $350 and increasing at a constant rate of 2.14%. The interest rate is 5.12% compounded annually. How much has been deposited in total?
A) $1445.59
B) $1454.59
C) $1400.00
D) $1459.59
E) $1444.59
Q4) Note: The calculations for this question were done using Excel's RATE function. Compute the nominal annual rate of interest on a loan of $67 000.00 repaid in semi-annual installments of $6540.00 in 11.5 years.
Q5) What is the accumulated value after 15.50 years of deposits of $500.00 earning interest at 4.00% compounded semi-annually if the deposits are made at the end of each quarter?
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Chapter 13: Annuities Due, Deferred Annuities, and Perpetuities
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Q1) Determine the accumulated value after 14.5 years of deposits of $172.00 made at the beginning of every 6 months and earning interest at 4.45% compounded monthly?
Q2) Note: The calculations for this question were done using Excel's RATE function. What is the nominal annual rate of interest charged quarterly on a lease valued at $2340.00 if payments of $240.00 are made at the beginning of every three months for 3.25 years?
Q3) Mrs. Lavergne deposits $562.71 at the beginning of every three months. Starting three months after the last deposit, she intends to withdraw $587.00 every three months for 16 years. If interest is 8.14% compounded quarterly, for how long must Mrs. Lavergne make deposits?
Q4) Judy paid for a living room suite over time, signing an installment contract that requires semi-annual payments of $2560.00 for 8.5 years. The first payment is made on the signing date and interest is 14.5% compounded semi-annually. What was the cash price?
Q5) A contract valued at 60 000.00 requires payments of $3000.00 at the beginning of each quarter. If interest is 6% compounded quarterly, calculate the term of the contract. To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 14: Amortization of Loans, Including Residential
Mortgages
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Q1) A debt of $12 970.00 with interest at 7.23% compounded semi-annually is repaid by payments of $1880.00 made at the end of every three months. Construct an amortization schedule showing the total paid and the total cost of the debt.
Q2) Rola Inc. borrowed $42 000.00 at 7% compounded semi-annually. The loan is repaid by payments of $4700.00 due at the end of every six months.
a) How many payments are needed?
b) How much of the principal will be repaid by the 6th payment?
c) Prepare a partial amortization schedule showing the details of the last three payments and totals.
Q3) A investor's price for a townhouse was $160,000.00. Sepaba Investments., the buyers of the rental unit, paid $40 000.00 down and financed the balance by making equal payments at the end of every six months for 25 years. Interest is 6% compounded semi-annually.
a) What is the size of the semi-annual payment?
b) How much will Sepaba Investments. owe after 20 years?
c) What is the total cost of the building for Sepaba Investments?
d) What is the total interest included in the payments?
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Page 17
Chapter 15: Bond Valuation and Sinking Funds
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Q1) Find the gain or loss on the sale without constructing a bond schedule for six $5000, 9.5% bonds with interest payable semi-annually redeemable at par bought twenty-one years before maturity to yield 10.5% compounded semi-annually. The bonds were sold three years later at 103.625.
Q2) Sepaba Construction made equal payments at the end of every six months into a sinking fund for 15 years. If the fund had a balance of $1000 000.00 after 15 years and interest is 6% compounded semi-annually, what was the accumulated balance in the fund after 10 years?
Q3) What is the purchase price of a bond that is issued on May 1, 2002 for 22 years at a coupon rate of 9.4% compounded semi-annually? The purchase date of the bond is May 11, 2007 and the yield rate is 8.5% compounded semi-annually. The bond has a face value of $5000 and is redeemable at par.
A) $4513.30
B) $5413.30
C) $5431.30
D) $4531.30
E) $4533.30
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Chapter 16: Investment Decision Applications
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Q1) A new venture that requires outlays of $127 000 for each of the first two years will yield net returns of $85 000 in each year for years 3 to 6 and $70 000 for each of the following four years. A residual value of $130 000 can be recovered at the end of the last income period. Should the venture be undertaken if a yield of 11.56% is required?
Q2) A commitment on the project requires an initial outlay of $10 000.00 and a further outlay of $5 000.00 after one year. Net returns are $5 000.00 per year for five years. What is the net present value of the project at 16%?
Q3) Tamia Industries plans to replace the outdated equipment that will cost the company $100 000.00 now and $60 000.00 six years from now. This replacement will result in revenues of $6000.00 at the end of each quarter for twelve years. At an interest rate of 9% compounded annually and using the Net Present Value criterion, should the company replace this equipment or not?
Q4) A contract is estimated to yield net returns of $7000.00 quarterly for seven years. To secure the contract, an immediate outlay of $80 000.00 and a further outlay of $60 000.00 three years from now are required. If interest is 6% compounded quarterly, determine if the investment should be accepted or rejected.
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