Question

A bank determines from an analysis on its deposits that account processing and other operating expenses cost the bank $5.45 per month. It has also determined that its non-operating expenses on its deposits are $1.70 per month. The bank wants to have a profit margin which is 11 percent of monthly costs. What monthly fee should this bank charge on its deposit accounts

Answer 1

Answer:

$7.94

Explanation:

The computation of the monthly fee that should be charged is given below;

Given that

Operating expense= $5.45

Non operating expense = $1.70

So, Total expense = $7.15

Now

Profit margin = 11% of Total cost

= 11%* of  $7.15

= $0.7865

Now Total fee to be charged

= Total cost + Profit margin

= $7.15 + $0.7865

= $7.9365

= $7.94