Question

A bank account with overdraft protection charges 0.08% per day plus a flat $10.00 fee for overdrawn accounts. If it takes 14 days to pay off an overdraft of $450.00, what is the total overdraft charge?

a. $50.40

c. $15.04

b. $150.40

d. $5.04

Answer 1

The total overdraft charge can be calculated by finding the daily charge and multiplying it by the number of days, and then adding the flat fee.

First, find the daily charge by multiplying the initial balance ($450) by the daily interest rate (0.08% or 0.008): $450 * 0.008 = $3.60

Next, find the total interest charge by multiplying the daily charge ($3.60) by the number of days (14): $3.60 * 14 = $50.40

Finally, add the flat fee of $10.00: $50.40 + $10.00 = $60.40

The total overdraft charge is $60.40, so the closest option is a) $50.40.