Michelle Has Maintained an Average Balance of $300 Per Month

question 109

Multiple Choice

Michelle has maintained an average balance of $300 per month for the first three months of the year, $800 per month for the next three months, and $1,000 per month for the final six months of the year in a NOW account. It requires a minimum balance of $500 to be maintained if annual interest of 5 percent is to be earned. She writes an average of 25 checks per month but the account does not have a service charge for checks although it costs the bank 10 cents to process each check.
-What is the average return (explicit and implicit) earned by her if the bank pays interest only on the amounts in excess of the required minimum of $500?

• A)9.01%.
• B)7.56%.
• C)6.93%.
• D)5.97%.
• E)8.23%.

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Definitions:

N = 15

Specifies the sample size of a study or dataset, indicating that there are 15 observations or elements.

Males

Refers to the male gender or sex in biological or sociological contexts.

Females

A term often used in research or statistics to denote the sex category of subjects or participants that identifies as female.

Hypotheses

Plural of hypothesis; statements or propositions made for the sake of argument that can be tested through experimentation or observation.