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NEW QUESTION: 1
The owner of a newly established janitorial entity is deciding what type of checking to open. The entity is planning to keep a US $500 minimum balance in the account for emergencies and plans to write roughly 80 checks per month. The bank charges US $10 per month plus a US $0.10 per check charge for a standard business checking account with no minimum balance. The entity also has the option of a premium business checking account that requires a US $2,500 minimum balance but has no monthly fees or per check charges If the entity's cost of funds is 10%. which account should the entity choose?
A. Premium account, because 'the savings is US $16 per year.
B. Premium account, because the savings is US $34 per year.
C. Standard account, because the savings is US $16 per year.
D. Standard account, because the savings is US $34 per year.
Answer: A
Explanation:
The standard account will cost US $10 per month plus US $8 in check charges $.10 x 80 checks), for a total of US $18 per month US $216 per year). The premium account has no check charges. But it will require the depositor to maintain a balance of US $2,000 more than desired. At a 10% cost of capital, the incremental US $2,000 minimum deposit will cost US $200 per year. Thus, the premium account should be selected because it is cheaper by US $16 per year.

NEW QUESTION: 2

A. Option A
B. Option B
C. Option D
D. Option C
Answer: D

NEW QUESTION: 3
HOTSPOT


Answer:
Explanation:

Explanation:

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