Question

You are comparing two savings accounts based on the interest you would earn and the fees they charge. Assuming you have a savings account with an average balance of $500, which combination of interest rates and fees are a better deal?

A. Bank a offers you a savings account with 10% annual interest rate $5/moth in fe es

B. Bank B offers you a savings account with 2% annual interest rate and no fe es

C. The two banks delas are equivalent

D. Trick question its a bad idea to open a savings account with just 500
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Answer 1

Option B

. Bank B offers you a savings account with 2% annual interest rate and no fees

How?

Annual interest rate=2%

Hence annual interest

`\\ \rm\longmapsto 500* (2)/(100)`

`\\ \rm\longmapsto 5(2)`

`\\ \rm\longmapsto \$10`

Now sum of money=$500+$10=$510

Answer 2

Option A

Yearly interest:

• $500*0.1 = $50

Yearly fees:

• $5*12 = $60

Total balance at the end of the year:

• $500 + $50 - $60 = $490 this is less than initial balance

False, as negative income

Option B

Yearly interest:

• $500*0.02 = $10

Balance at the end of the year:

• $500 + $10 = $510

TRUE, as real income

Option C

False, the deals are different with +$10 and -$10

Option D

False, there is no restriction as long as it is a source of income