Question

At River Bank, checking account customers earn 0.75% interest a month on their account balances, pay no service fees for writing checks, and pay a monthly $2.00 financial charge.

Calculate the income earned in one month on the checking account for a customer with an account balance of $1,000.

(1 point)
Responses

$4.25

$4.25

$5.50

$5.50

$6.75

$6.75

$7.25

Answer 1

To calculate the income earned in one month on the checking account for a customer with an account balance of $1,000, we first need to calculate the interest earned, and then subtract the monthly financial charge.

1. **Calculate the monthly interest earned:**
\[
\text{Interest} = \text{Account Balance} \times \text{Interest Rate}
\]
\[
\text{Interest} = 1000 \times 0.0075 = 7.50
\]

2. **Subtract the monthly financial charge:**
\[
\text{Net Income} = \text{Interest} - \text{Financial Charge}
\]
\[
\text{Net Income} = 7.50 - 2.00 = 5.50
\]

So, the income earned in one month on the checking account for a customer with an account balance of $1,000 is **$5.50**.