Question

. 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?

Answer 1

Given:
r = 0.018% = 0.00018
t = 1 year
A = $9.99, reqwuired minimum balance

Assume that
n = 365, daily compounding

Let P = the amount at the beginning of the year.
Then
P(1 + 0.00018/365)³⁶⁵ = 9.99
1.00018P = 9.99
P = $9.988 ≈ $9.99

Answer: $9.99

Answer 2

In this question, the interest rate is 0.018% and you need to have $9.99 interest. That mean, you need to divide the target interest value with the interest rate. The calculation would be:

interest = bank account * interest rate
$9.99 = bank account * 0.018%
bank account = $9.99/ 0.018% (don't forget the % mean 1/100)
bank account = $55,500

Assuming that the $9.99 value is $9.9999... then the answer would be $55,555