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What would be the net annual cost of the following checking accounts?

a. Monthly fee, $2.75; processing fee, 50 cents per check; checks written, an average of 30 a month. (Do not round intermediate calculations. Round your answer to 2 decimal places. Input the amount as a positive value.)

For this one, I got $213.


b. Interest earnings of 4 percent with a $450 minimum balance; average monthly balance, $600; monthly service charge of $20 for falling below the minimum balance, which occurs five times a year (no interest earned in these months). (Do not round intermediate calculations. Round your answer to 2 decimal places. Input the amount as a positive value.)

Not sure how to do this one exactly.

Respuesta :

Parrain

Answer: $86

Explanation:

Net Annual cost is:

= Total service charge - Interest earned

Total service cost = Service charge * Number of months

= 20 * 5

= $100

Interest earned = Average monthly balance * interest rate * Remaining months

= 600 * 4% * (12 - 5 months) / 12 months

= 600 * 4% * 7/12

= $14

Net Annual cost:

= 100 - 14

= $86

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