eBook Chapter4 Financial Planning Exercise 5 Determine the annual net cost of th

Question

eBook Chapter4 Financial Planning Exercise 5 Determine the annual net cost of these checking accounts. A "-" sign must precede any negative net cost answers. Round your intermediate calculations to two decimal places. a. Monthly fee $10, check-processing fee of 20 cents, average of 16 checks written per month. Round the answer to the nearest cent. b. Annual interest of 3.5% paid if balance exceeds $900, $7 monthly fee if account falls below minimum balance, average monthly balance $980, account falls below $900 during 5 months. Round the answer to the nearest cent.

Explanation / Answer

a

(16 checks × 12 months × $0.20) + ($10 × 12 months) = -$158.40 cost

b

Interest Earned=980*3.5%/12*7=18.38

Less : Monthly Fee For Months When Balance Is Below 900 =5*7 =$35

Net Cost Of Account =35-18.38=-16.63$

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