What is the average implicit interest rate

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Reference no: EM13827833

Problem:

1. What is the average implicit interest rate on a $100,000 account if the bank's average management costs are $2,500 and annual fees average $1,750?

a. 4.25 percent.
b. 2.50 percent.
c. 1.75 percent.
d. 0.75 percent.
e. -0.75 percent.

2. An FI offers a $2,500 minimum balance NOW account paying 4 percent annual interest, and there are no service charges as long as the customer maintains the minimum balance. The customer maintains a balance of $5,000, and averages 750 checks per year. Each check has a processing cost to the FI of $0.15. What is the annual gross interest return on this account to the customer?

a. $112.50.
b. $100.00.
c. $312.50.
d. $137.50.
e. $212.50.

Summary

These multiple choice questions is from Finance. The 1st question is about computing the average implicit interest rate for $100,000 with average management cost as well as annual fees added. The 2nd question is about computation of gross interest return by bank which offers $2500 minimum balance account and 4% interest rate.

Reference no: EM13827833

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