BUSN 380 Problem Set 2

1.   Thomas Franklin arrived at the following tax information:

Gross salary, $46,660

Interest earnings, $225

Dividend income, $80

One personal exemption, $3,400

Itemized deductions, $7,820

Adjustments to income, $1,150

What amount would Thomas report as taxable income?

2.  What would be the net annual cost of the following checking account? 

Monthly fee, $3.75;

Processing fee, 25 cents per check;

Checks written, an average of 22 a month.

3.   What would be the average tax rate for a person who paid taxes of $4,864.14 on a taxable income of $39,870?

4.   A payday loan company charges 4 percent interest for a two-week period.  What would be the annual interest rate from that company?

5.   What is the annual opportunity cost of a checking account that requires a $350 minimum balance to avoid service charges? Assume an interest rate of 6.5 percent.