Question

Camille Harris has a checking account with the Bank of the NorthWest. She earns 0.5% per month. If she maintains a balance of $1200, her checks are free, but if she goes under that amount, each check will have a two cent charge on it. For balances under $600, there is a service fee of $4 per month. Use the equation I = rB - sx - f to determine her earnings on the account if she has a balance of $1500 and she writes 25 checks.

A.$3.00
B.$3.50
C.$7.00
D.$7.50

Answer 1

Given:
Balance: 1,500
Issued: 25 checks.
interest per month: 0.5%

Based on the problem, the charges will only take effect if the remaining balance will fall below the minimum maintaining balance of 1,200 and additional charges will be given if her balance fall below 66. Since, she did not fall below maintaining balance she will merely earn interest.

1,500 * 0.5% = 7.50 Choice D.