Question

Raoul's savings account must have at least $500, or he is charged a $25 maintenance fee on the day his balance goes below that. The fee is charged no more than once each month. The account earns 1% simple simple interest with the interest credited to his account on the last day of the month. His balance was $716.23 Monday morning March 15th. His only transaction during the week was withdrawing $225 Tuesday March 16th. What was his balance Friday March 19?

Answer 1

EXPLANATION

Saving account = $500

Maitenance cost = $25/day

Charge = 1/month

Simple interest rate = 1%

Balance = $716.23

Withdrawal = $225

As the balance was $716.23 and then he withdraw $225, the balance at Tuesday 16 was 716.23 - 225 = 491.23

Now, we need to consider the maitenance fee as follows:

Maitenance fee at Friday 19 = 2 days x 25 = 50 dollars

The maintenance fee for 2 days (17 and 18) will be 50 dollars.

As the interest rate is just charged on the last day of the month, the balance at Friday 19 will be:

491.23 - 50 = 441.23

The answer is $441.23