if the interest rate on a savings account is 0.018%, approximately how much money do you need to keep in this account for 1 year

Question

Gnesinka [82]

3 years ago

11

if the interest rate on a savings account is 0.018%, approximately how much money do you need to keep in this account for 1 year

to earn enough interest to cover a single $9.99 Below-Minimum-Balance Fee?

Business

1 answer:

scZoUnD [109] · Answer 1 · 2022-02-04T09:25:53+03:00

scZoUnD [109]3 years ago

7 0

A = $9.99, the amount needed after 1 year
r = 0.018% = 0.00018, interest rate
n = 12, compoundings per year
t = 1, one year duration

Let P = required balance at the beginning of the year.
Then
$P(1+ \frac{r}{n} )^{nt} = A$
P(1 + 0.00018/12)¹² = 9.99
1.00018P = 9.99
P = $9.988 ≈ $9.99

Answer: $9.99