Question

At Greenbrier Bank, checking account customers earn 0.8% interest a month on their account balances, pay a $0.10 service fee per check, and pay a monthly $2.00 financial charge.

Calculate the income earned on the checking account for a customer who writes 21 checks and maintains a minimum balance of $1,210.

(1 point)
Responses

$4.27

$4.27

$5.58

$5.58

$6.42

$6.42

$7.35

Answer 1

To calculate the income earned on the checking account, we need to consider both the interest earned and the fees incurred by the customer.

1. **Calculate the monthly interest earned:**
- Minimum balance = $1,210
- Monthly interest rate = 0.8%
- Interest earned = Minimum balance × Monthly interest rate
\[
\text{Interest earned} = 1210 \times 0.008 = 9.68
\]

2. **Calculate the total service fees for checks:**
- Number of checks written = 21
- Service fee per check = $0.10
- Total service fees = Number of checks × Service fee per check
\[
\text{Total service fees} = 21 \times 0.10 = 2.10
\]

3. **Deduct the monthly financial charge:**
- Monthly financial charge = $2.00

4. **Calculate the net income for the customer:**
\[
\text{Net Income} = \text{Interest earned} - \text{Total service fees} - \text{Monthly financial charge}
\]
\[
\text{Net Income} = 9.68 - 2.10 - 2.00 = 5.58
\]

Thus, the income earned on the checking account for the customer is **$5.58**.