Business Mathematics
Mock Exam
Course Introduction
Business Mathematics introduces students to mathematical concepts and techniques essential for analyzing and solving quantitative problems in business contexts. The course covers topics such as basic arithmetic, percentages, interest calculations, annuities, depreciation, inventory control, linear programming, and statistics relevant to business operations. Through real-world examples and practical applications, students develop analytical skills and learn to apply mathematical reasoning to financial decision-making, resource management, and optimization in diverse business scenarios. This foundation equips students with the quantitative tools necessary for further studies in business and for success in professional environments.
Recommended Textbook Mathematics of Finance 8th Edition by Robert Brown
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8 Chapters
674 Verified Questions
674 Flashcards
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Page 2
Chapter 1: Simple Interest and Simple Discount
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) You go to a lending institution that offers a 270-day discounted loan at d = 9%.You wish to walk out the door with $5000.What size loan should you ask for?
A)$4667.12
B)$5332.88
C)$5356.62
D)$5360.87
Answer: C
Q2) Using the Merchant's rule,a debt of $4000 is paid off as follows: $1000 in 30 days from today,$2000 in 60 days from today,and a final payment of $1026.51 in 80 days from today.What simple interest rate,r,was used?
A)r < 4%
B)4% < r < 4.5%
C)4.5% < r < 5.0%
D)5.0% < r
Answer: B
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3
Chapter 2: Compound Interest
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) What simple interest rate r is equivalent to j<sub>12</sub> = 9% if money is invested for 3.5 years?
A)8.96%
B)9.83%
C)10.53%
D)11.27%
Answer: C
Q2) How long does it take for a loan of $5000 to accumulate $1000 of interest if j<sub>2</sub> = 10%?
A)1 year,10 months,13 days
B)1 year,10 months,29 days
C)3 years,8 months,26 days
D)3 years,9 months,28 days
Answer: A
Q3) What simple interest rate,r,is equivalent to j<sub>6</sub> = 8% over 8 months?
A)16.77%
B)8.16%
C)15.08%
D)7.74%
Answer: B
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Chapter 3: Simple Annuities
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) An individual buys $15,000 worth of furniture.They make a down payment of $5000 and pay off the rest of their bill with quarterly payments of $R for 10 years.If j<sub>4</sub> = 8% and the first quarterly payment is made 3 months after the loan is advanced,what is R?
A)$543.34
B)$365.56
C)$358.39
D)$338.75
Answer: B
Q2) A loan of $10,000 is to be repaid by 60 monthly payments of $205.00 plus a smaller concluding payment made one month after the last $205 payment.Payments begin one month from now.If j<sub>12</sub> = 9%,find the amount of the smaller final payment.
A)$124.46
B)$135.62
C)$194.86
D)$196.32
Answer: D
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Chapter 4: General and Other Annuities
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79 Verified Questions
79 Flashcards
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Sample Questions
Q1) A mortgage of $A is obtained at a rate of j<sub>2</sub> = 6%.The mortgage is to be paid off with monthly payments of $700 for 25 years (first payment one month from now).What is A? (Answer to nearest dollar. )
A)$108,065
B)$108,645
C)$109,408
D)$110,302
Q2) You invest $A today.From this fund,you withdraw $500 today,followed by withdrawals that increase by 3% every 3 months.You plan to make a total of 20 quarterly withdrawals.If your investment earns interest at j<sub>4</sub> = 8%,what is A?
A)$10,773.05
B)$10,988.52
C)$11,096.25
D)$11,208.29
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Chapter 5: Repayment of Debts
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Sample Questions
Q1) A $60,000 loan is paid back over 10 years with monthly payments of $790.18 at j<sub>12</sub> = 9.918%.What is the outstanding balance of the loan after 4 years using the sum of digits method? (Answer to the nearest dollar)You are given: Total interest = $34,821.12.
A)$42,110
B)$44,288
C)$51,252
D)$56,890
Q2) A loan of $A is taken out and is to be repaid with level monthly payments over n-years at j<sub>12</sub> = 18%.The outstanding balance after 75 payments is $16,855.14 and after 76 payments is $16,590.17.What is the monthly payment?
A)$252.83
B)$264.97
C)$513.82
D)D)$517.80
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Chapter 6: Bonds
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Sample Questions
Q1) A $10,000 bond pays semi-annual coupons at j<sub>2</sub> = 7% every March 2 and September 2.The bond is redeemable at par and is purchased between coupon dates on May 15,2010 to yield j<sub>2</sub> = 6.5%.At the time of purchase there are 10 coupons remaining to be paid,plus the redemption value.What is the full (or dirty)price of the bond on May 15,2010?
A)$10,352.81
B)$10,342.74
C)$10,210.56
D)$10,201.98
Q2) Bill Jones purchases a $1000 bond for $750.76.The bond is redeemable at par in 10 years and pays semi-annual coupons at j<sub>2</sub> = 6%.He sells the coupons to Sam Smith at a price to yield Sam Smith j<sub>2</sub> = 8%.What is the yield rate j<sub>2</sub> earned by Bill Jones? (Answer to the nearest 0.10%)
A)9.00%
B)9.50%
C)10.00%
D)11.00%
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Chapter 7: Business Decisions, Capital Budgeting and Depreciation
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) Which of the following statements is (are)true?
(I)If an investment project has an internal rate of return (IRR)equal to the cost of capital,the net present value (NPV)for that project must be positive.
(II)If the cumulative cash flows, F<sub>t</sub>,change signs more than once during the term of an investment,there may be more than one IRR.
A)Both are true
B)I only
C)II only
D)Neither are true
Q2) An investment of $724 will produce estimated cash flows of $250 at the end of each of the next four years.Which of the following would be reported as the internal rate of return,IRR? (Answer to the nearest 0.5%)
A)13.0%
B)13.5%
C)14.0%
D)14.5%
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Chapter 8: Contingent Payments
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Sample Questions
Q1) A perishable product is purchased by a retailer for $5 and is sold for $7.If an item is not sold during the day,the retailer loses $5.Past history has shown that there is a 30% chance of selling 28 of these products in a day,a 28% chance of selling 29 of them in a day,a 25% chance of selling 30 of them in a day and a 17% chance of selling 31 of them in a day.If you order 30 of the items per day,what is your expected daily profit?
A)$48.04
B)$23.41
C)$18.14
D) $13.43
Q2) A game show gives contestants 5 questions with 3 possible answers and awards $10 for every correct answer.If a contestant answers all 5 questions correctly,they win an extra $500.What is the probability of a contestant who guesses at every question will get at least 2 questions correct?
A)0.54
B)0.46
C)0.40
D)0.33
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Page 10