Personal Finance 1st Edition by Jack R. Kapoor

Exercise 14

Comparing Costs of Checking Accounts. What would be the net annual cost of the following checking accounts? (Obj. 5)

a.  Monthly fee, $3.75; processing fee, $0.25 cents per check; checks written, an average of 22 a month.

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b.  Interest earnings of 6 percent with a $500 minimum balance; average monthly balance, $600; monthly service charge of $15 for falling below the minimum balance, which occurs three times a year (no interest earned in these months).

Step 1 of 3

a) Calculate the net annual cost for the following checking accounts:

The net annual cost would be calculated as

Substitute:

Calculate: