# Maths: Insurance and Straight Line Method

MATHS FOR BUSINESS AND FINANCE

5

Q=Sullivan handbags marks up their bags at 45% of the selling price. Pat Sullivan saw a bag at a trade show that she would sell to her customers for $85. What is the most she could pay for the bag and still retain the 45% markup of the selling price?

P=selling price

C=cost of product

R=percentage markup

P=C(1+r)

85=C(1+45%/100=1.45)

C=85/1.45=58.62

Check back

58.62*45%=26.379=26.38

58.62+26.38=85

Answer: Most she could pay for the bag and still retain markup of 45% is: $58.62

6.

Q=Jeff Jones earns $1,200 per week. He is married and claims four (4) withholding allowances. The FICA rate is as follows: Social Security rate is 6.2% on $97,500; Medicare rate is 1.45%. To date his cumulative wages are $6,000. Each pay check, his employer also deducts $42.50 for the health Insurance. What is his net pay? (Calculate FIT by percentage method)

Gross earnings $1,200 weekly

Total deductions = $42.50 Health insurance

+1.45% of weekly salary=1.45%=0.0145*1,200=17.40

+6.2%=0.062X1200=74.40 Social Security

=42.50+17.40+74.40=$134.30

FIT = $17.40+74.40*2=$183.60

Answer: Net pay = $1,200-$134.30=$1,065.70

8.

Q=On May 12, Bob Campbell accepted a $5,000 note in granting a time extension of a bill of goods bought by Rick Ween. Terms of the note were 8% for 120 days. On July 8, Bob needed a raise in cash and discounted the note at Rick’s bank at a discount rate of 9%. Calculate Bob’s proceeds. Using exact date table;

May 12 to July 8 =57 days

Note amount = $5,000

Period =120 days

Rate = 9% =0.09

5000*57*0.09

360 = $71.2500

Total proceeds = Investment + total interest

=$ 5000+$71.25=$5,071.25

Answer: Bob’s proceeds=$5,071.25

10.

Q= Roger Fox made deposits of $900 semiannually to Reel bank, which pays 6% interest compounded semiannually. After seven years, Roger made no more deposits. What would be the balance in the account...

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