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Question
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 earned (explicit and implicit) by her over the year?
A. 6.33%.
B. 9.67%.
C. 8.39%.
D. 9.53%.
E. 7.01%.
Answer
This answer is hidden. It contains 1 characters.
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