Free Business Mathematics Practice Questions

Sample Practice Questions

Try these 10 sample questions from the Business Mathematics practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1What is the decimal equivalent of the percentage 3.5%?

   1. A.0.0035
   2. B.0.035Correct answer: B
   3. C.0.35
   4. D.3.5

   Explanation: OpenStax states, "We can change a percent into decimal form by dividing the percent by 100 and representing the result as a decimal." Dividing 3.5 by 100 gives 0.035.

   Reference: Contemporary Mathematics, 6.1 Understanding Percent — 6.1, Convert Between Percent, Decimal, and Fractional Values

2. 2Solve the equation 3(x − 2) = 15.

   1. A.x = 3
   2. B.x = 5
   3. C.x = 7Correct answer: C
   4. D.x = 9

   Explanation: OpenStax advises, "Use the Distributive Property to remove any parentheses." Distributing gives 3x − 6 = 15, so 3x = 21 and x = 7.

   Reference: Elementary Algebra, 2.4 General Strategy for Linear Equations — 2.4, General strategy for solving linear equations

3. 3What is the arithmetic mean of 4, 6, 8, and 14?

   1. A.4
   2. B.7
   3. C.8Correct answer: C
   4. D.32

   Explanation: OpenStax explains how to find a mean: "add the 50 weights together and divide by 50". Here the sum is 32 and the four values have mean 32/4 = 8.

   Reference: Introductory Statistics 2e, 2.5 Measures of the Center — 2.5, Measures of the Center of the Data

4. 4A compensation index has a base-period value of 100 and a current value of 120. What does 120 indicate relative to the base period?

   1. A.A 20% increaseCorrect answer: A
   2. B.A 20% decrease
   3. C.A 120% increase
   4. D.A 120% decrease

   Explanation: BLS explains that "an index of 110.0 means there has been a 10-percent increase". Likewise, 120 indicates a 20% increase from a base of 100.

   Reference: BLS: Index Numbers and Percent Changes — What is an index number?

5. 5At 10% interest compounded annually, what is the present value of $1,210 due in two years?

   1. A.$1,000Correct answer: A
   2. B.$1,089
   3. C.$1,100
   4. D.$1,210

   Explanation: OpenStax explains that "present value is the current value of a single future investment". Discounting gives $1,210/(1.10²) = $1,000.

   Reference: Principles of Managerial Accounting, 11.3 Time Value of Money — 11.3, Time Value of Money

6. 6A business allocates 12% of a $750 budget to supplies. How much is allocated to supplies?

   1. A.$62.50
   2. B.$75
   3. C.$90Correct answer: C
   4. D.$120

   Explanation: OpenStax explains, "To find “one-fourth of 56” we would multiply 56 by one-fourth." Similarly, 12% of $750 is 0.12 × $750 = $90.

   Reference: Contemporary Mathematics, 6.1 Understanding Percent — 6.1, Calculate the Total, Percent, or Part

7. 7What is the solution to −4x > 12?

   1. A.x is less than negative threeCorrect answer: A
   2. B.x is greater than negative three
   3. C.x is less than positive three
   4. D.x is greater than positive three

   Explanation: OpenStax states, "When we divide or multiply an inequality by a negative number, the inequality sign reverses." Dividing both sides by −4 reverses the sign and gives x < −3.

   Reference: Elementary Algebra 2e, 2.7 Solve Linear Inequalities — 2.7, Division and Multiplication Properties of Inequality

8. 8What is the median of the ordered values 2, 3, 4, 7, and 20?

   1. A.3
   2. B.4Correct answer: B
   3. C.7
   4. D.7.2

   Explanation: For an odd number of observations, OpenStax says "the median is the middle value of the ordered data". The middle of these five values is 4.

   Reference: Introductory Statistics 2e, 2.5 Measures of the Center — 2.5, Measures of the Center of the Data

9. 9An item's base-period price is $8 and its comparison-period price is $10. What is its simple price index with the base set to 100?

   1. A.80
   2. B.100
   3. C.120
   4. D.125Correct answer: D

   Explanation: BLS gives the formula "Index = ( P1/P0) * 100 = (Comparison Price/Base Price) * 100." Thus (10/8) × 100 = 125.

   Reference: BLS: Import and Export Price Indexes Technical Addendum — Index Construction

10. 10What is the defining payment timing of an ordinary annuity?

    1. A.Equal payments at the end of each periodCorrect answer: A
    2. B.Equal payments at the start of each period
    3. C.Unequal payments at the end of each period
    4. D.A single payment at the end of the term

    Explanation: For an ordinary annuity, OpenStax says "the payments are made at the end of each period in equal installments". The beginning-of-period arrangement is an annuity due.

    Reference: Principles of Managerial Accounting, 11.3 Time Value of Money — 11.3, Future Value of an Ordinary Annuity