Q: A company sells a product for $150. The cost to produce the product is $100. What is the percentage markup on cost?

$Markup = \frac{150 - 100}{100} \times 100\% = 50\%$

Q: A business borrows $5,000 at a simple interest rate of 6% per year for 3 years. What is the total interest paid?

$I = 5,000 \times 0.06 \times 3 = $900$

Q: A retailer offers a 20% trade discount on a product with a list price of $500. What is the net price after the discount?

$Net\ Price = 500 - (500 \times 0.20) = $400$

Q: A business invests $2,000 at an annual compound interest rate of 5% for 4 years. What is the future value of the investment?

$FV = 2,000 \times (1 + 0.05)^4 = $2,431.01$

Question 1

A business is considering two investment projects. Project A requires an initial investment of $10,000 and will return $12,000 after one year. Project B requires an initial investment of $10,000 and will return $13,000 after two years. If the annual interest rate is 5%, which project has the higher present value?

Accepted Answer

Project A, because $PV = \frac{12,000}{(1+0.05)^1} = $11,428.57$ and Project B, $PV = \frac{13,000}{(1+0.05)^2} = $11,793.39$, so Project B has the higher present value.

Question 2

Which of the following best describes the concept of 'markup' in business mathematics?

Accepted Answer

Markup is the difference between the cost price and the selling price, expressed as a percentage of the cost price.

Question 3

A company sells a product for $150. The cost to produce the product is $100. What is the percentage markup on cost?

Accepted Answer

$Markup = \frac{150 - 100}{100} 	imes 100\% = 50\%$

Question 4

Which formula correctly calculates the simple interest earned on a principal $P$ at an annual interest rate $r$ over $t$ years?

Accepted Answer

$I = P 	imes r 	imes t$

Question 5

A business borrows $5,000 at a simple interest rate of 6% per year for 3 years. What is the total interest paid?

Accepted Answer

$I = 5,000 	imes 0.06 	imes 3 = $900$

Question 6

Which of the following is NOT a valid application of business mathematics in real-world business scenarios?

Accepted Answer

Determining the optimal route for delivery trucks using calculus.

Question 7

A retailer offers a 20% trade discount on a product with a list price of $500. What is the net price after the discount?

Accepted Answer

$Net\ Price = 500 - (500 	imes 0.20) = $400$

Question 8

Which equation represents the calculation of compound interest for principal $P$, annual rate $r$, and $n$ years?

Accepted Answer

$A = P 	imes (1 + r)^n$

Question 9

A business invests $2,000 at an annual compound interest rate of 5% for 4 years. What is the future value of the investment?

Accepted Answer

$FV = 2,000 	imes (1 + 0.05)^4 = $2,431.01$

Question 10

Which of the following best describes the difference between gross and net profit?

Accepted Answer

Gross profit is total revenue minus cost of goods sold; net profit is gross profit minus operating expenses and taxes.

Question 11

A company’s financial statement shows total revenue of $50,000, cost of goods sold of $30,000, and operating expenses of $10,000. What is the net profit?

Accepted Answer

$Net\ Profit = 50,000 - 30,000 - 10,000 = $10,000$

Question 12

Which of the following is a correct application of percentages in business decision-making?

Accepted Answer

Calculating the percentage increase in sales from one year to the next.

Question 13

A business wants to compare the present value of $5,000 received today versus $5,000 received in 3 years at a discount rate of 4%. What is the present value of $5,000 received in 3 years?

Accepted Answer

$PV = \frac{5,000}{(1 + 0.04)^3} = $4,444.98$

Question 14

Which of the following is the correct formula for calculating the future value of an ordinary annuity?

Accepted Answer

$FV = PMT 	imes \frac{(1 + r)^n - 1}{r}$

Question 15

A business owner wants to save $1,000 every year for 5 years in an account earning 6% interest compounded annually. What will be the future value of these savings?

Accepted Answer

$FV = 1,000 	imes \frac{(1 + 0.06)^5 - 1}{0.06} = $5,637.09$

Question 16

Which of the following statements about trade discounts is correct?

Accepted Answer

Trade discounts are subtracted from the list price to determine the net price.

Question 17

A company receives a 10% discount and then a 5% discount on a $1,000 invoice. What is the final net price?

Accepted Answer

$Net\ Price = 1,000 	imes (1 - 0.10) 	imes (1 - 0.05) = $855$

Question 18

Which of the following is a key competence developed in a business mathematics course?

Accepted Answer

Ability to analyze and solve mathematical problems in business applications such as interest, discounts, and financial statements.

Question 19

A business manager needs to calculate the present value of a $10,000 payment to be received in 5 years. The discount rate is 7%. What is the present value?

Accepted Answer

$PV = \frac{10,000}{(1 + 0.07)^5} = $7,129.86$

Mathematics for Social Sciences I (MATH 103): Course Syllabus and Study Guide

Study Guide - Practice Questions

Study Guide - Flashcards