Question

For 5 years, Gavin has had a checking account at Truth Bank. He uses a bank ATM 2 times per month and a nonbank ATM once a month. He checks his account statement online. How much money would Gavin save per month if he switched to Old River Bank?

Answer 1

EXPLANATION

Let's see the facts:

Number of years: 5

Account period = 2 times/month

Nonbank ATM -------> once/ month

If he switch the account to Old River Bank he would save:

$6 - $4.95 = $1.05

Transaction cost_Trust Bank = $1/transaction * 2 = $2

Nonbank_Trust Bank = $2/transaction = $2

Trust Bank Cost = 2 + 2 + 6 = $10

The account in the Old River Bank would be:

Account Services = $4.95

Bank ATM Cost = $0.00

Nonbank ATM Cost = $2.5/transactions * 1 = $2.5

----------------------

$7.45

The total cost at Old River would be = $7.45

The difference between Truth Bank and Old River would be $10-$7.45 = $2.55

Gavin would save $2.55 per month.