question archive 1) You open a checking account
1) You open a checking account
Subject:MathPrice:2.87 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?
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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.
