Question

Interest earning of 3% with a $450 minimum balance average monthly balance of $900 monthly service charge of $11 for falling below the minimum balance which occurs five times a year no interest earned in the month. What is the net annual cost

Answer 1

Answer:

$39.25

Explanation:

Given that Interest earning = 3 percent

minimum balance = $450

average monthly balance = $900

monthly service charge = $11

Occurrence period = 5 times

Hence, Net annual cost = Service charges - Interest earnings

=> Service Charge = (5 × $11) - Interest earnings (7 / 12)(0.03 × $900)

= $55 - $15.75

= $39.25

Therefore, the final answer to this question is $39.25