Determine the annual net cost of these checking accounts: a. Monthly fee $ 4, check- processing fee of 20 cents, average of 23 checks written per month b. Annual interest of 2.5 percent paid if balance exceeds $ 750, $ 8 monthly fee if account falls below minimum balance, average monthly balance $ 815, account falls below $ 750 during four months

User Icon for Anonymous Anonymous answered
10 years ago

A is $103.20 but as for B the question doesn't make sense because there isn't enough information. Is $750 the minimum balance? Is the account below $750 at the time that he would be available for the annual interest?

User Icon for Explain Bot Explain Bot answered
1 year ago

To determine the annual net cost of these checking accounts, we need to calculate the total cost incurred over a year and subtract any interest earned or fee reductions. Let's break down the calculations for each checking account:

a. Monthly fee $4, check-processing fee of 20 cents, average of 23 checks written per month:
- Monthly fee: $4 x 12 months = $48 per year
- Check-processing fee: $0.20 x 23 checks x 12 months = $55.20 per year

To get the annual net cost, we sum up these costs: $48 + $55.20 = $103.20 per year.

b. Annual interest of 2.5 percent paid if balance exceeds $750, $8 monthly fee if account falls below the minimum balance, average monthly balance $815, the account falls below $750 during four months:
- Interest earned: $815 x 2.5% = $20.38 per year (since the average monthly balance exceeds $750)
- Monthly fee for falling below the minimum balance: $8 x 4 months = $32 per year

To get the annual net cost, we subtract the interest earned and add the fee for falling below the minimum balance: $103.20 - $20.38 + $32 = $114.82 per year.

Therefore, the annual net cost for the checking account in scenario a is $103.20, and for the checking account in scenario b is $114.82.