An FI Offers a $2,500 Minimum Balance NOW Account Paying

Multiple Choice

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. Gross return = (avg.balance above minimum × explicit interest rate) + (implicit interest)
Gross return = [(5,000 × 0.04) + (750 × 0.15) ] = (200 + 112.5) = $312.50