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)

$4.25

$5.50

$6.75

$7.25

Answer 1

To calculate the income earned in one month on the checking account, we can use the following formula:

**Interest earned = Account balance × Monthly interest rate**

Given:

- Account balance = $1,000
- Monthly interest rate = 0.75% = 0.0075

Now, we can calculate the interest earned:

\[
\text{Interest earned} = 1000 \times 0.0075 = 7.5
\]

So, the customer earns $7.50 in interest for the month.

However, there is a monthly financial charge of $2.00:

\[
\text{Net income earned} = \text{Interest earned} - \text{Monthly financial charge} = 7.5 - 2 = 5.5
\]

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

The answer is **$5.50**.