Use the Following Information to Answer the Question

question 62

Multiple Choice

Use the following information to answer the question.A current deposit account requires a minimum balance of $500 if annual interest of 5% is to be earned monthly on its deposits.An account holder has maintained an average balance of $300 for the first nine months of the year and $800 for the last three months of the year.She has written an average of 20 cheques a month and is not charged for these services.However, it costs the bank $0.02 to process each cheque.The bank would like to limit the average return (both explicit and implicit) earned by the account holder to 5% per year.How much should it charge for processing each check to this account holder assuming that it will pay annual interest of 5% and minimum balances of $200 are maintained?

• A)1 cent per cheque
• B)2 cents per cheque
• C)3 cents per cheque
• D)4 cents per cheque

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