question archive 1) You open a checking account
1) You open a checking account
Subject:FinancePrice:4.87 Bought7
1) You open a checking account. You are paid 3% interest on the average daily balance, but are charged a $4 monthly charge. Assuming that interest is paid monthly (regardless of the number of days in the month), calculate the average balance you must maintain to offset the $4 monthly charge.
2) You borrow $350 from your aunt and agree to repay her $400 ($350 principal + $50 interest) in 18 months. What interest rate (usi ng simple interest, and to the nearest tenth) are you paying?
3) Bella Sandino failed to pay her cell phone bill in the amount of $85.14 by the due date of March 4. Calculate the amount Bella must pay on March 20 if the company charges 20% interest on late payments. Assume a 365-day year.
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Answer:
1)
P= 1/RT = $4/ 3% * 1/12 = $4/.03 * 1/ 12 = $4/.0025
You must maintain an average balance of $1,600.
2)
The interest rate is 0.79% per month.
Step-by-step explanation:
Present value of borrowed amount = $350
Future value of borrowed amount = $400
Interest amount = $50
Time duration = 18 months or 1.5 years
Now we have to find the rate of interest by using the above information.
Here below is the calculation of interest rate.
Interest rate = P×R×T 50 = 350 × R×18
R = 0.007936 Or,
R = 0.79% per month.
3)
Given:
P = $85.14
i = 20% / 0.20
n = 20/365
F = P(1 + in)
F = $85.14 (1 + (0.20*(20/365))
F = $86.0730411 (Answer)
Step-by-step explanation
Formula in simple interest:
F = P(1 + in)
P = present worth
i = interest
n = number of interest period (in years)
