What would be the net annual cost of the following checking accounts? a. Monthly fee, $3.75;...

Question:

What would be the net annual cost of the following checking accounts?

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

Annual Cost of Checking Accounts:

The net annual cost incurred by an account holder in a given commercial bank is usually ascertained by taking into account all the possible interest earnings made during the year and the total fee consisting of service charge, check fee, communication charge etc. incurred during the year.

Answer and Explanation: 1

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The calculated value of the net annual cost for the given checking accounts is $1,074.

The total annual fee corresponding to checks written is given...

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What is a Checking Account? - Definition, Types & Advantages

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Chapter 6 / Lesson 8
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Learn what a checking account is and see how it works. Understand the different types of checking accounts and the benefits and disadvantages of a checking account.


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