Business Calculations Part 1

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What is the process of discounting a promissory note called?

Discounting (correct)

Maturity value

Fractional or decimal part of a year

Compounding

What is the formula used to calculate simple interest?

Future value = Present value * (1 + rate)^time

Net present value = Sum of discounted future cash flows

Simple interest = Principal * Rate * Time (correct)

Markup = Selling price - Cost

What is the purpose of calculating the net present value of an investment?

To calculate the markup based on cost

To compare investment decisions (correct)

To find the federal tax withholding per paycheck

To determine the stock yield

Which of the following is NOT a type of discount mentioned in the text?

Volume discount Signup and view all the answers

What is the purpose of calculating the employer's total deposit for withholding tax, social security tax, and Medicare tax per pay period and quarterly?

To fulfill tax reporting obligations Signup and view all the answers

What is the purpose of explaining the usage of statistics, probability, and systems of measurement in business?

To make predictions and decisions based on data Signup and view all the answers

What is the purpose of calculating the future value and compound interest by compounding manually?

To explain the effect compounding has in an investment and lending environment Signup and view all the answers

What is the purpose of calculating the rate of markup or markdown?

To determine the cost, markup, or selling price when any two of the three are known Signup and view all the answers

What is the purpose of calculating federal and state unemployment taxes?

To compute business expenses related to employees: benefits, disability insurance, travel, and employee training Signup and view all the answers

What is the purpose of determining the stock yield, earnings per share, and price-earnings ratio?

To compare investment decisions and make mathematical comparisons of investment alternatives Signup and view all the answers

Which of the following is NOT a factor considered when computing the costs involved in owning an item like an automobile or appliance?

Opportunity cost Signup and view all the answers

What is the purpose of an amortization table in consumer credit?

To determine the monthly payment amount Signup and view all the answers

If you are comparing the costs of a 15-year and 30-year fixed-rate mortgage, what information would you need to calculate?

All of the above Signup and view all the answers

What is the difference between a simple average and a weighted average?

A simple average gives equal weight to all values, while a weighted average assigns different weights to different values Signup and view all the answers

Which of the following is NOT a type of loan mentioned in the text?

Balloon payment loan Signup and view all the answers

What is the purpose of calculating the mean, median, and mode for a data set?

To determine the central tendency of the data Signup and view all the answers

If you want to calculate the total purchase price of an item, including interest or finance charges, what information would you need?

All of the above Signup and view all the answers

What is the purpose of calculating the PITI (Principal, Interest, Taxes, and Insurance) for a mortgage?

To determine the total monthly payment for a homeowner Signup and view all the answers

Which of the following is NOT mentioned in the text as a type of graph or chart that should be identified and constructed?

Scatter plot Signup and view all the answers

What is the purpose of calculating the annual percentage rate (APR) for a credit card or loan?

To compare the costs of different credit options Signup and view all the answers