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					Maths Quest Maths A Year 12 for Queensland     Chapter 2 Appreciation and depreciation Test Yourself          1

Test Yourself            Chapter 2 Appreciation and depreciation
                                                    Name: ___________________________
All Multiple Choice

1     A 2-litre container of milk costs $2.42.     D          5      A firm buys equipment for $23 600. It    E
      If inflation averages 3% p.a. for the                          depreciates at the rate of $2950 per
      next 5 years, the cost of the milk at that                     annum, constant depreciation.
      time will be:                                                  Assuming zero scrap value, the value
      A      $2.45                                                   of the equipment after 5 years is
      B      $2.53                                                   expected to be:
      C      $2.74                                                   A     $20 650
      D      $2.81                                                   B     $17 700
      E      $2.90                                                   C     $14 750
                                                                     D     $11 800
                                                                     E     $8850
2     A can of soft drink at the moment can        C
      be purchased for $1.20. If inflation
      during the next two years is 3.2% and                   6      A farmer bought machinery for           B
      2.7%, what would be the expected cost                          $18 400. It depreciates at the rate of
      of the soft drink can in two years’                            $3036 per annum. Assuming zero scrap
      time?                                                          value, the value of the machinery after
      A     $1.23                                                    4 years is expected to be:
      B     $1.24                                                    A     $3220
      C     $1.27                                                    B     $6256
      D     $1.32                                                    C     $9292
      E     $1.35                                                    D     $12 328
                                                                     E     $15 364

3     The comprehensive family medical             D
      insurance costs $1750 per annum.                        7      A new engraving machine was bought       E
      Assuming the average rate of increase                          for $30 000. If depreciation is
      of 9.5% each year, the insurance                               calculated at the rate of 27% reducing
      premium after 3 years is likely to be:                         balance, then the value at the end of
      A     $1916                                                    5 years is:
      B     $2098                                                    A     $21 900
      C     $2249                                                    B     $15 987
      D     $2298                                                    C     $11 670.11
      E     $2516                                                    D     $8519.47
                                                                     E     $6219.21

4     A colour printer (with expected              B
      lifetime of 7 years and zero scrap
      value) is bought for $670. Assuming
      straight-line depreciation, the amount
      of depreciation allowed per year is:
      A      $46.90
      B      $95.71
      C      $111.67
      D      $134
      E      $670
Maths Quest Maths A Year 12 for Queensland   Chapter 2 Appreciation and depreciation Test Yourself             2

8     Machinery worth $50 000 diminishes         B          12     The value of a $5000 investment made        E
      at the rate of 16.5% per annum. The                          at 6% for 5 years is:
      management decides to replace the                            A    $5300
      machinery when its value falls below                         B    $5637.09
      $10 000. The time before the                                 C    $5955.08
      replacement of the machinery is closest                      D    $6312.38
      to:                                                          E    $6691.13
      A      8 years
      B      9 years
      C      10 years                                       13     The value of an annuity in which            B
      D      11 years                                              $1000 is invested at the end of each
      E      12 years                                              year at 6% p.a. for 5 years is:
                                                                   A     $5300
                                                                   B     $5637.09
9     A new van worth $19 000 with               C                 C     $5955.08
      reducing balance depreciation at 20%                         D     $6312.38
      per annum is bought by a courier                             E     $6691.13
      company. The value of the van after
      3 years is expected to be:
      A     $15 200                                                Where necessary use Present and
      B     $12 160                                                Future Value Tables on pages 90 and
      C     $9728                                                  92 of your book in the following
      D     $7782.40                                               questions.
      E     $6225.92

                                                            14     Sally invests $2000 at the end of each      D
10    An electrician bought tools of trade to    E                 year in a retirement fund. She makes
      the value of $12 000. If he depreciates                      payments for 10 years. If the fund pays
      these tools at the rate of 15% p.a.,                         4% p.a., the value of her retirement
      which of the following calculations                          benefit will be closest to:
      would give the correct estimate of their                     A     $9000
      value in 3 years’ time?                                      B     $12 000
      A     12 000  0.15 3                                        C     $20 000
                                                                   D     $24 000
      B     12 000  1.5 3
                                                                   E     $30 000
      C     12 000  15 3
      D     12 000  8.5 3
      E     12 000  0.85 3                                 15     If Sally had invested $4000 at the end      C
                                                                   of each year for a period of 5 years, her
                                                                   retirement benefit would be closest to:
                                                                   A     $20 000
11    The Australian Tax Office allows a         A
                                                                   B     $21 000
      30% p.a. tax deduction for depreciation
                                                                   C     $22 000
      on a $4850 computer system. The
                                                                   D     $23 000
      allowable tax deduction in the second
                                                                   E     $24 000
      year would be:
      A     $1018.50
      B     $1455
      C     $1663.55
      D     $2376.50
      E     $3395
Maths Quest Maths A Year 12 for Queensland   Chapter 2 Appreciation and depreciation Test Yourself         3

16    In order to collect $10 000 after 5 years C           19     What present value would be             E
      at 6% p.a. interest, compounded                              equivalent to an investment of $900 per
      annually, the yearly annuity payment                         year into an annuity at 5% p.a. for a
      would be closest to:                                         period of 6 years?
      A     $1500                                                  A     $3791
      B     $1600                                                  B     $3897
      C     $1800                                                  C     $4426
      D     $1900                                                  D     $4500
      E     $2000                                                  E     $4568


17    Fiona is able to contribute $760 at the  D            20     The interest earned on $20 000          C
      end of each year to an annuity fund.                         invested at 6% p.a. for 10 years with
      She would like to collect $10 000 at the                     interest compounding six-monthly is:
      end of 10 years. The minimum interest                        A     $12 000
      rate which would enable her to do this                       B     $15816.95
      is:                                                          C     $16 122.22
      A     3% p.a.                                                D     $35 816.95
      B     4% p.a.                                                E     $36 122.22
      C     5% p.a.
      D     6% p.a.
      E     7% p.a.


18    Mavis aims to save $20 000 in the next     D
      10 years. Her annuity fund is paying
      6% p.a. with interest compounded
      annually. The annual contribution
      Mavis must make is closest to:
      A    $700
      B    $740
      C    $1000
      D    $1500
      E    $2000

				
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