1. You want to open a checking account with a $500deposit. You estimate you will write 10 checks amonth and use an ATM from other banks abouttwice a week. Bank A charges $1 per check if youdrop under a minimum balance of $100, but you canuse another bank's ATM without a fee. Bank B hasfree checking but charges $1 each time you useanother bank's ATM. Calculate the difference in feesbetween the two banks over the course of one yearfor the following scenarios:a. Your balance slips below $100 every other month.b. Your balance slips below $100 every other month,but you are now able to pay a bill online each month,dropping the number of checks you have to write tonine monthly. You also find you are only using theother bank's ATM about once a week.c. You maintain a minimum balance of $500, writethree checks a week, and use another bank's ATMonly about once a month.

Solution- (A) Bank A Fees Bank B Fees 10 checks/month balance <$100 for 6 months $1…

1. You want to open a checking account with a $500 deposit. You estimate you will write 10 checks a month and use an ATM from other banks about twice a week. Bank A charges $1 per check if you drop under a minimum balance of $100, but you ca use another bank's ATM without a fee. Bank B has free checking but charges $1 each time you use

1. You want to open a checking account with a $500 deposit. You estimate you will write 10 checks a month and use an ATM from other banks about twice a week. Bank A charges $1 per check if you drop under a minimum balance of $100, but you ca use another bank's ATM without a fee. Bank B has free checking but charges $1 each time you use

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are looking for a bank in which to open a checking account for your new part-time business. You estimate that in the first year, you will be writing 30 checks per month and will make three debit transactions per month. Your average daily balance is estimated to be $900 for the first six months and $2,400 for the next six months. Use the following information to solve the problem. Bank Monthly Fees and Conditions Bank 1 $16.00 with $1,000 min. daily balance-or-$25.00 under $1,000 min. daily balance Bank 2 $4.50 plus $0.40 per check over 10 checks monthly$1.00 per debit transaction Bank 3 $5 plus $0.25 per check$2.00 per debit transaction Bank 4 $8 plus $0.15 per check$1.50 per debit transaction (a) Calculate the cost (in $) of doing business with each bank for a year. Bank 1 Bank 2 Bank 3 Bank 4 (b) Which bank should you choose for your checking account? Bank 1 Bank 2 Bank 3 Bank 4
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 400 payments a day will be made to lock boxes with an average payment size of $3,000. The bank's charge for operating the lock boxes is $0.50 a check. The interest rate is 0.012% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. Note: Do not round intermediate calculations. b. Is it worthwhile to adopt the system? c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Net daily advantage b. Is it worthwhile to adopt the system? c. Minimum reduction in time $ Yes (56) 1.39 days
Which do you prefer: a bank account that pays 10% per year (EAR) for 3 years or a. An account that pays 5.0% every 6 months for 3 years? b. An account that pays 15.0% every 18 months for 3 years? c. An account that pays 1.0% per month for 3 years? a. An account that pays 5.0% every 6 months for 3 years? If you deposit $1 into a bank account that pays 10% per year for 3 years, the amount you will receive after 3 years is $ If you deposit $1 into a bank account that pays 5.0% every 6 months for 3 years, the amount you will receive after 3 years is $ (Select from the drop-down menu.) (Round to five decimal places.) Therefore, you will prefer b. An account that pays 15.0% every 18 months for 3 years? If you deposit $1 into a bank account that pays 15.0% every 18 months for 3 years, the amount you will receive after 3 years is $ Therefore, you will prefer (Select from the drop-down menu.) c. An account that pays 1.0% per month for 3 years? If you deposit $1 into a bank account that pays…
If you are trying to build credit by using a credit card, each time you make a purchase with the credit card, deduct that amount from your checking account. That way, when your credit card bill is due, you will have enough to pay the credit card off in full. Kathy Lehner is going to start doing this. She plans on paying her credit card bill in full this month. How much does she owe with a 9% APR and the following transactions? (Round your answer to the nearest cent.) 31-day billing cycle 10/1 Previous balance 10/3 Credit 10/12 Charge: King Soopers 10/15 Payment 10/25 Charge: Delta 10/30 Charge: Holiday Fun Amount owed $84 cr. $143 $260 cr. $316 $56 Check my $ 1,159
If you are trying to build credit by using a credit card, each time you make a purchase with the credit card, deduct that amount from your checking account. That way, when your credit card bill is due, you will have enough to pay the credit card off in full. Kathy Lehner is going to start doing this. She plans on paying her credit card bill in full this month. How much does she owe with a 6% APR and the following transactions? (Round your answer to the nearest cent.) 31-day billing cycle $ 1,173 $ 70 cr. 10/1 Previous balance 10/3 Credit 10/12 Charge: King Soopers $ 157 $ 400 cr. $ 330 10/15 Payment 10/25 Charge: Delta 10/30 Charge: Holiday Fun $ 70
Selecting a Bank. Julie wants to open a bank account with $43. Julie estimates that she will write 23 checks per month and use her ATM card at the home bank. She will maintain a monthly balance of $500. Which bank should Julie choose? Hillsboro Bank First National South Trust Bank Sun Coast Bank ATM charges: Home bank Free Free Free Free Other bank 5 free, then $1.15 per use $1.40 per use $1.40 per use $1.40 per use Checking: Minimum deposit $100 $28 $1 $1 Minimum balance required to avoid fees* N/A N/A $500 N/A Monthly fees $8.66 $10.11 $15.88 $3.61 Check-writing charges 15 free, then $0.85 per check 10 free, then $0.85 per check Unlimited Each check $0.43 * N/A means monthly fees apply irrespective of account balances. Based on the information given in the chart, which bank should Julie…
An investor has accumulated $4,450 and is looking for the best rate of return that can be earned over the next year. A bank savings account will pay 9%. A one-year bank certificate of deposit will pay 11%, but the minimum investment is $7,450. Required: a. Calculate the amount of return the investor would earn if the $4,450 were invested for one year at 9%. b. Calculate the net amount of return the investor would earn if $3,000 were borrowed at a cost of 19%, and then $7,450 were invested for one year at 11%. c. Calculate the net rate of return on the investment of $4,450 if the investor accepts the strategy of part b. Note: Round your answer to 2 decimal places. a. Amount of return b. Net amount of return c. Net rate of return %
Calculating the net costs of checking accounts. Determine the annual net cost of these checking accounts: a. Monthly fee $4, check-processing fee of 20 cents, average of 23 checks written per month. b. Annual interest of 1.5% paid if balance exceeds $750, $8 monthly fee if account falls between minimum balance, average monthly balance $815, account falls below $750 durng 4 months.
Your neighbor goes to the post office once a month and picks up two checks, one for $13,000 and one for $3,000. The larger check takes 2 days to clear after it is deposited; the smaller one takes 4 days. Assume 30 days per month. 1. What is the total float for the month? 2. What is the average daily float? 3a. What is the average daily receipts? 3b. What is the weighted average delay?
Marty selected Money Bank because of the features described below. Marty plans on using network ATMS 8 times per month. What are Marty's total estimated annual fees for a checking account with direct paycheck deposit, two savings accounts, 1 overdraft, and no 2nd copies of statements? (1 Point) Feature Description Fees Amount Non-sufficient funds $34 Checking Account Free with direct 2nd copy of statement $4 deposit of paycheck 1 account free, Network ATM useage First 2 per month free, $4 for each additional Savings Account transaction each additional account $5/month Online Services Free with all checking and savings accounts
Suppose that with the advent of ATMs, a person withdraws money once every two days. Further, suppose this person spends $10 per day. Calculate the amount of money this person withdraws each time she goes to the bank.

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