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AEPA Business Education study materials
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AEPA Business Education practice questions

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Question 1Business Management, Entrepreneurship, and Organizational Leadership

Which statement accurately describes the liability of the owner of a sole proprietorship?

  1. The owner bears unlimited personal liability for business debts Correct answer.
  2. Federal law requires at least two owners to form the business
  3. The business is a separate legal entity that shields the owner from creditor claims
  4. Ownership interests can be sold on a public stock exchange without restriction

Explanation

A sole proprietorship is not a separate legal entity, so the owner is personally responsible for all business obligations, including debts and lawsuits. Creditors may pursue the owner's personal assets to satisfy business claims.

Question 2Business Management, Entrepreneurship, and Organizational Leadership

A manager asks team members for ideas and discusses alternatives before issuing the final schedule for the department. Which leadership style is being demonstrated?

  1. Autocratic
  2. Laissez-faire
  3. Democratic Correct answer.
  4. Bureaucratic

Explanation

Democratic, or participative, leadership solicits input from group members while the leader keeps final decision authority. The manager gathers ideas but still makes the decision, which matches this style.

Question 3Business Management, Entrepreneurship, and Organizational Leadership

Which cost is fixed in the short run for a manufacturer that is operating well below capacity?

  1. Raw materials consumed per unit produced
  2. Hourly wages for production-line workers
  3. Sales commissions paid per unit sold
  4. Monthly rent on the factory building Correct answer.

Explanation

Fixed costs do not change with output volume within a relevant range; rent is owed whether the plant makes one unit or many. Variable costs rise and fall with production or sales volume.

Question 4Business Management, Entrepreneurship, and Organizational Leadership

A competing bakery opens a lower-priced store across the street. In a SWOT analysis, this development is best classified as:

  1. A weakness
  2. A threat Correct answer.
  3. A strength
  4. An opportunity

Explanation

In SWOT, strengths and weaknesses are internal, while opportunities and threats come from the external environment. A new competitor is an external development that could reduce sales, which makes it a threat.

Question 5Business Management, Entrepreneurship, and Organizational Leadership

What is the primary purpose of a written business plan for a start-up seeking outside funding?

  1. To replace the need for ongoing financial record keeping
  2. To guarantee that the venture will earn a profit in its first year
  3. To satisfy the state filing that legally creates the business entity
  4. To show lenders and investors how the venture will operate and return capital Correct answer.

Explanation

A business plan documents the market analysis, operating model, and financial projections so that lenders and investors can judge risk and expected returns. It is a planning and communication tool rather than a legal filing or a substitute for bookkeeping.

Question 6Business Management, Entrepreneurship, and Organizational Leadership

An entrepreneur funds early operations from personal savings and customer prepayments instead of raising outside capital. This approach is known as:

  1. A leveraged buyout
  2. Franchising
  3. Angel investing
  4. Bootstrapping Correct answer.

Explanation

Bootstrapping means financing a venture from personal resources and early revenue rather than outside capital. It preserves full ownership but limits how quickly the business can expand.

Question 7Business Management, Entrepreneurship, and Organizational Leadership

An employee receives conflicting instructions from two different supervisors. Which principle of organization is being violated?

  1. Unity of command Correct answer.
  2. Departmentalization
  3. Span of control
  4. Division of labor

Explanation

Unity of command holds that each employee should report to only one supervisor, which prevents conflicting directives and unclear accountability. Receiving orders from two supervisors directly violates that principle.

Question 8Business Management, Entrepreneurship, and Organizational Leadership

Which phrase best defines organizational culture?

  1. Shared values and norms that guide member behavior Correct answer.
  2. The written rules published in the employee handbook
  3. The formal chain of command on the organization chart
  4. The total compensation package offered to employees

Explanation

Organizational culture consists of the shared values, beliefs, and norms that shape how members actually behave. Formal documents such as handbooks and org charts describe structure and policy, which may diverge from the real culture.

Question 9Business Management, Entrepreneurship, and Organizational Leadership

A product sells for $40 per unit, variable cost is $25 per unit, and total fixed costs are $60,000. What is the break-even quantity?

  1. 6,000 units
  2. 1,500 units
  3. 4,000 units Correct answer.
  4. 2,400 units

Explanation

Break-even quantity equals fixed costs divided by contribution margin per unit, which is price minus variable cost ($40 − $25 = $15). Dividing $60,000 by $15 gives 4,000 units.

Question 10Business Management, Entrepreneurship, and Organizational Leadership

A retailer buys an item for $24 and sells it for $30. What is the markup percentage based on cost?

  1. 20%
  2. 125%
  3. 30%
  4. 25% Correct answer.

Explanation

Markup on cost is the dollar markup divided by cost: ($30 − $24) ÷ $24 = 0.25, or 25%. Markup on selling price would use $30 in the denominator and produce 20%.

Question 11Business Management, Entrepreneurship, and Organizational Leadership

A company has fixed costs of $90,000 and a contribution margin ratio of 30%. What sales revenue is required to break even?

  1. $900,000
  2. $27,000
  3. $120,000
  4. $300,000 Correct answer.

Explanation

Break-even sales revenue equals fixed costs divided by the contribution margin ratio: $90,000 ÷ 0.30 = $300,000. At that revenue, contribution exactly covers fixed costs and profit is zero.

Question 12Business Management, Entrepreneurship, and Organizational Leadership

A firm reports strong net income but repeatedly runs short of cash to pay suppliers. Which explanation is most consistent with this situation?

  1. Credit sales and inventory buildup absorb cash before customers pay Correct answer.
  2. A profitable firm cannot run short of cash for very long
  3. Profit is measured annually, while cash is tracked each month
  4. Suppliers are paid out of net income rather than revenue

Explanation

Revenue is recorded when earned, but cash arrives when customers pay, so credit sales and inventory purchases can drain cash even in a profitable firm. Cash flow timing, not profitability alone, determines whether bills can be met.

Question 13Business Management, Entrepreneurship, and Organizational Leadership

According to McGregor's Theory X, a manager is most likely to:

  1. delegate all scheduling decisions to self-managed teams
  2. supervise closely and use rewards and penalties to control staff Correct answer.
  3. assume workers seek responsibility and need little supervision
  4. treat salary as the only factor capable of motivating employees

Explanation

Theory X assumes employees dislike work and avoid responsibility, so managers direct closely and rely on rewards and punishments. Theory Y instead assumes workers seek responsibility and can exercise self-direction.

Question 14Business Management, Entrepreneurship, and Organizational Leadership

An entrepreneur buys a franchise instead of starting an independent business. What is the main advantage of this choice?

  1. The franchisee keeps complete control over pricing and product design
  2. The franchisee avoids paying ongoing fees to the franchisor
  3. The franchisee gains a proven format and established brand recognition Correct answer.
  4. The franchisee is protected from any financial loss

Explanation

A franchisee pays for the right to use an established brand and operating system, which lowers start-up risk and builds customer recognition quickly. In exchange, the franchisee gives up some independence and pays continuing royalties and fees.

Question 15Business Management, Entrepreneurship, and Organizational Leadership

A manager with 18 direct reports struggles to coach each employee individually. What is the most likely organizational consequence of this wide span of control?

  1. Each subordinate receives more direct supervision
  2. The number of management layers tends to increase
  3. The organization must add another layer of middle managers
  4. Supervision becomes less detailed and more administrative Correct answer.

Explanation

A wide span of control gives a manager more subordinates than can be closely supervised, so oversight becomes general and administrative. Narrow spans permit detailed coaching but require additional management layers.

Question 16Business Management, Entrepreneurship, and Organizational Leadership

A firm reports current assets of $150,000 and current liabilities of $90,000. What is its working capital?

  1. $240,000
  2. $60,000 Correct answer.
  3. $150,000
  4. $90,000

Explanation

Working capital equals current assets minus current liabilities: $150,000 − $90,000 = $60,000. It measures the short-term liquidity available to fund daily operations.

Question 17Business Management, Entrepreneurship, and Organizational Leadership

In a limited liability partnership, a partner's personal liability is generally limited to:

  1. nothing at all, because the firm has no legal existence
  2. all partnership debts, shared equally among the partners
  3. the amount of the firm's annual revenue
  4. the partner's own investment and personal negligence Correct answer.

Explanation

In an LLP, partners are shielded from obligations arising from other partners' malpractice, while each partner remains liable for personal negligence and their own investment. A general partnership, by contrast, imposes joint liability on all partners.

Question 18Business Management, Entrepreneurship, and Organizational Leadership

A new streaming service sets a low introductory price to attract subscribers quickly, planning to raise prices later. This tactic is called:

  1. Prestige pricing
  2. Price skimming
  3. Penetration pricing Correct answer.
  4. Cost-plus pricing

Explanation

Penetration pricing sets a low initial price to build market share quickly, with the intent of raising prices after customers are established. Skimming does the reverse by starting high and lowering the price over time.

Question 19Business Management, Entrepreneurship, and Organizational Leadership

A clothing manufacturer purchases a cotton mill so it can supply its own fabric. This is an example of:

  1. Horizontal integration
  2. Outsourcing
  3. Backward vertical integration Correct answer.
  4. A conglomerate merger

Explanation

Backward vertical integration occurs when a firm takes ownership of a step earlier in its own supply chain, such as a manufacturer acquiring a raw-materials supplier. Forward integration would move the firm closer to the final customer.

Question 20Business Management, Entrepreneurship, and Organizational Leadership

According to Herzberg's two-factor theory, which factor is most likely to produce genuine job satisfaction?

  1. Clean and safe working conditions
  2. Recognition and opportunities for advancement Correct answer.
  3. Fair company policies and supportive supervision
  4. A competitive salary and a secure retirement plan

Explanation

Herzberg classified recognition, achievement, responsibility, and advancement as motivators that generate satisfaction. Salary, working conditions, and company policy are hygiene factors that prevent dissatisfaction but do not by themselves motivate.

Question 21Business Management, Entrepreneurship, and Organizational Leadership

A firm has fixed costs of $45,000, a unit price of $30, a unit variable cost of $18, and current sales of 5,000 units. What is the margin of safety in units?

  1. 5,000 units
  2. 1,250 units Correct answer.
  3. 625 units
  4. 3,750 units

Explanation

Contribution per unit is $30 − $18 = $12, so break-even is $45,000 ÷ $12 = 3,750 units. Margin of safety is current sales minus break-even sales: 5,000 − 3,750 = 1,250 units.

Question 22Business Management, Entrepreneurship, and Organizational Leadership

A highly capable, experienced employee is confident in her role and needs little direction. According to situational leadership theory, the leader should:

  1. explain decisions and invite questions before acting
  2. delegate authority and stay available for support Correct answer.
  3. give detailed task instructions and closely monitor progress
  4. increase pressure by setting tighter deadlines

Explanation

Situational leadership matches leader behavior to follower readiness; a confident, experienced follower is at a high-readiness level that calls for delegating. The leader transfers decision authority while remaining available for support.

Question 23Business Management, Entrepreneurship, and Organizational Leadership

Before launching a new enterprise software system, a company shows employees why current practices are inadequate in order to build readiness. In Lewin's model of change, this step is:

  1. Unfreezing Correct answer.
  2. Moving
  3. Refreezing
  4. Resisting

Explanation

Lewin's model has three stages: unfreezing, moving, and refreezing. Creating readiness by demonstrating that current practices fall short loosens resistance and constitutes unfreezing.

Question 24Business Management, Entrepreneurship, and Organizational Leadership

Which statement best distinguishes the stakeholder view of the firm from the shareholder view?

  1. The stakeholder view is concerned only with employees and customers
  2. The stakeholder view judges success solely by the firm's share price
  3. The stakeholder view weighs the interests of all affected groups Correct answer.
  4. The stakeholder view holds that only owners may vote on major decisions

Explanation

The shareholder view holds that managers should maximize value for owners, while the stakeholder view holds that managers must balance the interests of employees, customers, communities, and other affected parties. The difference is whose interests count in decision making.

Question 25Business Management, Entrepreneurship, and Organizational Leadership

In a matrix organization, an employee reports to both a functional manager and a project manager. What is the most likely consequence?

  1. Conflicting priorities and heavier coordination demands Correct answer.
  2. A shorter chain of command with fewer managers
  3. Clear, single-source authority for every decision
  4. Faster approvals because review levels are eliminated

Explanation

A matrix structure gives employees two reporting lines, one functional and one project-based. This improves resource sharing and expertise but creates competing priorities and substantial coordination demands.

Question 26Business Management, Entrepreneurship, and Organizational Leadership

A sole proprietor's business closes with debts that exceed the value of its assets. How is the owner's personal property treated under the law?

  1. It is liable only up to the amount the owner originally invested.
  2. Only property titled in the business name can be seized by creditors.
  3. It can be used to satisfy the unpaid business debts. Correct answer.
  4. It is protected because the business is a separate legal person.

Explanation

A sole proprietorship has no legal existence apart from its owner, so business obligations are the owner's personal obligations. Creditors may therefore pursue the owner's home, savings, and other personal assets to collect what is owed. Limited personal exposure appears only when a separate entity such as a corporation or a limited liability company is formed.

Question 27Business Management, Entrepreneurship, and Organizational Leadership

A bakery holds a patented recipe and a loyal customer base that rivals have not been able to copy. In a SWOT analysis, these items are classified as:

  1. opportunities
  2. weaknesses
  3. threats
  4. strengths Correct answer.

Explanation

SWOT separates internal capabilities from external conditions. Strengths are internal resources or capabilities that give the firm an advantage over competitors, such as a proprietary recipe or strong customer loyalty. Weaknesses are internal deficiencies, while opportunities and threats originate outside the firm.

Question 28Business Management, Entrepreneurship, and Organizational Leadership

In Maslow's hierarchy of needs, an employee's desire for recognition, responsibility, and advancement belongs to which level?

  1. self-actualization needs
  2. esteem needs Correct answer.
  3. physiological needs
  4. safety needs

Explanation

Maslow ordered needs from basic survival upward: physiological, safety, social, esteem, and self-actualization. Esteem needs cover status, recognition, achievement, and the respect of others, which is why titles and awards motivate at this level. Self-actualization concerns reaching one's full potential rather than earning recognition.

Question 29Business Management, Entrepreneurship, and Organizational Leadership

A team leader invites members to share ideas, discusses alternatives openly, and then makes the final decision. Which leadership style is being used?

  1. laissez-faire
  2. autocratic
  3. transactional
  4. democratic Correct answer.

Explanation

Democratic, or participative, leaders consult group members before deciding while keeping final authority. The style builds commitment and draws on team expertise, though it can slow decisions. Autocratic leaders decide alone, and laissez-faire leaders give the group wide freedom with little direction.

Question 30Business Management, Entrepreneurship, and Organizational Leadership

Unit sales have flattened, imitators have copied the product's features, and price competition is squeezing margins. Which product life cycle stage is this?

  1. maturity Correct answer.
  2. growth
  3. decline
  4. introduction

Explanation

In maturity, industry sales level off because most potential buyers already own the product, and rivals compete mainly on price, promotion, and small feature differences. Firms typically defend market share and seek efficiencies or line extensions. Introduction and growth bring rising sales, while decline brings falling sales.

Question 31Business Management, Entrepreneurship, and Organizational Leadership

A manufacturer organizes itself into three units, consumer products, industrial products, and services, each with its own marketing, production, and finance staff. What structure is this?

  1. a centralized functional hierarchy
  2. a divisional structure Correct answer.
  3. a dual-authority matrix structure
  4. a boundaryless network structure

Explanation

A divisional structure creates semi-autonomous units, often by product, customer, or region, each containing the functions it needs to serve its own market. This sharpens accountability for each unit's results but duplicates staff and equipment across divisions. Functional structures group by specialty, and matrix structures impose dual reporting.

Question 32Business Management, Entrepreneurship, and Organizational Leadership

A manager assigns a project to an employee and grants the authority to make the decisions needed to finish it. Which statement about the assignment is accurate?

  1. The manager has decentralized the entire department.
  2. The manager has transferred accountability to the employee.
  3. The manager remains accountable for the project's results. Correct answer.
  4. The manager no longer needs to monitor the employee's progress.

Explanation

Delegation passes authority and responsibility for tasks to a subordinate, but accountability for the outcome stays with the person who assigned the work. Managers must therefore follow up, supply resources, and intervene if needed. Decentralization is a broader shift of decision authority through an organization, not a single assignment.

Question 33Business Management, Entrepreneurship, and Organizational Leadership

Which statement best describes a venture capital firm?

  1. It provides government grants that recipients are never required to repay.
  2. It buys shares of established companies on public stock exchanges.
  3. It takes equity stakes in high-growth private firms. Correct answer.
  4. It lends to small businesses at a fixed rate without taking an ownership stake.

Explanation

Venture capital firms pool funds from investors and buy equity in young, high-growth private companies that need capital to scale. Because the investment is risky and illiquid, they typically seek substantial ownership, board influence, and an eventual exit. Bank loans, public stock purchases, and grants do not involve this kind of equity financing.

Question 34Business Management, Entrepreneurship, and Organizational Leadership

Before posting a vacancy, a human resources manager writes a document listing the education, certifications, and skills the successful candidate must have. This document is a:

  1. job description
  2. job rotation plan
  3. job specification Correct answer.
  4. job evaluation

Explanation

A job specification states the qualifications a jobholder must possess: education, experience, certifications, and skills. It is paired with the job description, which lists duties, responsibilities, and working conditions. Job evaluation, by contrast, is used to set pay relationships among positions.

Question 35Business Management, Entrepreneurship, and Organizational Leadership

A manufacturer adopts just-in-time inventory. Which pair of outcomes should management anticipate?

  1. Lower holding costs with no added risk of stockouts or late deliveries
  2. Lower holding costs and greater exposure to supplier disruptions Correct answer.
  3. Higher holding costs with no change in exposure to supply delays
  4. Higher holding costs and greater exposure to supplier disruptions

Explanation

Just-in-time systems order materials to arrive close to when they are needed, which cuts inventory carrying costs, storage space, and obsolescence. The trade-off is less buffer stock, so a late shipment or a quality problem can halt production. Firms adopting JIT therefore invest heavily in supplier reliability.

Question 36Business Management, Entrepreneurship, and Organizational Leadership

A statement that describes the future position an organization intends to achieve is called a:

  1. procedures manual
  2. mission statement
  3. vision statement Correct answer.
  4. values statement

Explanation

A vision statement paints a picture of what the organization wants to become, often framed for a future date. A mission statement defines its present purpose and business, while a values statement sets out guiding beliefs. Procedures manuals, in contrast, prescribe how routine tasks are performed.

Question 37Business Management, Entrepreneurship, and Organizational Leadership

An employee doubts that working harder will improve her performance rating, no matter how much effort she puts in. In expectancy theory, which element is weak?

  1. instrumentality
  2. expectancy Correct answer.
  3. valence
  4. equity

Explanation

Expectancy theory holds that motivation depends on expectancy (effort will produce performance), instrumentality (performance will bring outcomes), and valence (the outcomes are valued). Doubting that effort changes the rating is low expectancy. Instrumentality concerns whether a good rating actually leads to rewards such as pay or promotion.

Question 38Business Management, Entrepreneurship, and Organizational Leadership

A furniture maker builds custom pieces only for boutique hotels and charges premium prices. Which of Porter's generic strategies is it pursuing?

  1. Stuck in the middle
  2. Broad differentiation
  3. Focus Correct answer.
  4. Cost leadership

Explanation

A focus strategy targets a narrow market segment and tailors the offer to it rather than serving the whole industry. Here the segment is boutique hotels, and customization supports premium pricing within it. Cost leadership and broad differentiation both aim at a wide market, while being stuck in the middle means lacking a clear advantage.

Question 39Business Management, Entrepreneurship, and Organizational Leadership

A founder owns 600,000 of a company's 1,000,000 outstanding shares. The company then issues 200,000 new shares to an investor. What percentage of the company does the founder own immediately after the issuance?

  1. 60%
  2. 55%
  3. 40%
  4. 50% Correct answer.

Explanation

New shares increase the total share count, so ownership must be recomputed on the post-issuance base. The founder's 600,000 shares divided by the new total of 1,200,000 shares equals 50 percent. The founder still holds the same number of shares, but the stake is diluted from 60 percent.

Question 40Business Management, Entrepreneurship, and Organizational Leadership

A firm reports total liabilities of $450,000 and total stockholders' equity of $300,000. What is its debt-to-equity ratio?

  1. 1.50 Correct answer.
  2. 1.00
  3. 0.67
  4. 2.50

Explanation

The debt-to-equity ratio divides total liabilities by total stockholders' equity, showing how much debt the firm uses for each dollar of equity. Here $450,000 divided by $300,000 equals 1.50, meaning creditors fund $1.50 for every $1.00 of equity. A higher ratio generally signals greater financial leverage and risk.

Question 41Accounting, Finance, and Business Mathematics

A business reports total assets of $150,000 and total liabilities of $90,000. What is owner's equity?

  1. $240,000
  2. $60,000 Correct answer.
  3. $150,000
  4. $90,000

Explanation

The accounting equation states that assets equal liabilities plus owner's equity. Rearranging gives equity = $150,000 − $90,000 = $60,000.

Question 42Accounting, Finance, and Business Mathematics

A company buys office supplies on account. Which journal entry records this transaction?

  1. Debit Supplies; credit Accounts Payable Correct answer.
  2. Debit Accounts Payable; credit Supplies
  3. Debit Cash; credit Supplies
  4. Debit Supplies Expense; credit Cash

Explanation

Buying supplies on account increases the asset Supplies and creates the liability Accounts Payable. The debit goes to the asset account and the credit to the liability account, and no cash moves until the bill is paid.

Question 43Accounting, Finance, and Business Mathematics

A retailer has sales revenue of $80,000, cost of goods sold of $50,000, and operating expenses of $15,000. What is gross profit?

  1. $15,000
  2. $30,000 Correct answer.
  3. $80,000
  4. $65,000

Explanation

Gross profit is sales revenue minus cost of goods sold, calculated before operating expenses are deducted. Here $80,000 − $50,000 = $30,000.

Question 44Accounting, Finance, and Business Mathematics

A firm borrows $5,000 at 6% annual simple interest for 9 months. How much interest accrues?

  1. $225 Correct answer.
  2. $300
  3. $75
  4. $900

Explanation

Simple interest equals principal × rate × time, with time stated in years: $5,000 × 0.06 × 9/12 = $225.

Question 45Accounting, Finance, and Business Mathematics

Fixed costs are $24,000, the selling price is $20 per unit, and variable cost is $12 per unit. What is the break-even point in units?

  1. 2,000 units
  2. 3,000 units Correct answer.
  3. 7,500 units
  4. 1,200 units

Explanation

Break-even units equal fixed costs divided by contribution margin per unit. Contribution margin is $20 − $12 = $8, so $24,000 ÷ $8 = 3,000 units.

Question 46Accounting, Finance, and Business Mathematics

A company has current assets of $90,000, current liabilities of $45,000, and inventory of $30,000. What is the current ratio?

  1. 3.0
  2. 2.0 Correct answer.
  3. 1.33
  4. 0.5

Explanation

The current ratio divides total current assets by total current liabilities: $90,000 ÷ $45,000 = 2.0. Inventory is removed only when computing the quick ratio.

Question 47Accounting, Finance, and Business Mathematics

A company collects $5,000 from a customer who was billed last month. What is the effect on net income?

  1. Owner's equity decreases by $5,000
  2. Net income decreases by $5,000
  3. Net income increases by $5,000
  4. Net income is unchanged Correct answer.

Explanation

Under accrual accounting, revenue is recorded when it is earned, which happened when the customer was billed. Collecting the receivable later merely shifts value between Cash and Accounts Receivable, so net income does not change.

Question 48Accounting, Finance, and Business Mathematics

Sales rose from $40,000 to $46,000. What is the percentage increase?

  1. 13%
  2. 15% Correct answer.
  3. 6%
  4. 87%

Explanation

Percentage change equals the change divided by the original amount. ($46,000 − $40,000) ÷ $40,000 = 15%.

Question 49Accounting, Finance, and Business Mathematics

At year-end, $3,000 of wages have been earned by employees but remain unpaid and unrecorded. What is the required adjusting entry?

  1. Debit Cash; credit Wages Payable
  2. Debit Wages Payable; credit Wages Expense
  3. Debit Wages Expense; credit Wages Payable Correct answer.
  4. Debit Wages Expense; credit Cash

Explanation

Wages earned but unpaid at year-end must be accrued so the expense is reported in the period the work was performed. The entry debits Wages Expense and credits Wages Payable, a liability.

Question 50Accounting, Finance, and Business Mathematics

Equipment costs $50,000, has a $5,000 salvage value, and a 9-year useful life. What is annual straight-line depreciation?

  1. $6,000
  2. $4,500
  3. $5,000 Correct answer.
  4. $5,555

Explanation

Straight-line depreciation spreads the depreciable cost evenly over the useful life. Depreciable cost is $50,000 − $5,000 = $45,000, and $45,000 ÷ 9 = $5,000 per year.