Question

The balance of Aaron's average balance checking account at the beginning of last cycle was $400, and the only transaction for the cycle was a check that Aaron wrote for $200, which cleared exactly halfway through the cycle. On what amount did Aaron's checking account pay interest last cycle?

Answer 1

The answer is A $300 :)

Answer 2

Aaron's checking account pay interest last cycle at $300

Explanation:

Banks pay pay interest on a daily basis compounded 365 days a year.

Interest paid for the first half of the month = $400

Interest paid for the second half of the month = $200

Now, for finding the average balance :

We add both the interests paid for the first and the second month then divide their sum by 2

`\text{So, Average = }(400+200)/(2)\\\\\bf\implies \textbf{Hence, Average = }\$300`

So, Aaron's checking account pay interest last cycle at $300