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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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