Maggie wants to open a checkingaccount that will be the least expensive given he

Question

Maggie wants to open a checkingaccount that will be the least expensive given her normal financial transactions. She typically writes 15 checks a month and uses an ATM 35 times a month. Her minimum checking balances falls to about $350 in an average month. Which of the following accounts would be lease expensive for Maggie? (Show Work please.)

Account A:

- No monthly fee is charged if a minimum balance of at least $300 is maintained.

- A $5.00 fee is charged in any month the minimum balance falls below $300.

- An ATM fee of $0.10 per transaction is charged on all transaction

Account B:

- No monthly fee is charged if a minimum balance of at least $500 is maintained

- A $3.00 fee plus $0.10/check is charged in any month the minimum balance falls below $500.

- There is no ATM fee on Transaction

Explanation / Answer

Account A :

fees for minimum balance limit = 0

fees for ATM = 0.1*35 = $ 3.5

total cost = $ 3.5

Account B

fees for minimum balance limit = 3 + 0.1*(15 ) = $ 4.5

fees for ATM = 0

total cost = $4.5

so Account A would be least expensive..

However in any month if the minimum bank balance falls below 300 then the total cost for account A will become $8.5 ... but for B will be same...

so acount B will be preferred

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