What is the average implicit interest rate on a $100,000 account if the bank's average management costs are $2,500 and annual fees average $1,750?
A)4.25 percent.
B)2.50 percent.
C)1.75 percent.
D)0.75 percent.
E)-0.75 percent. (costs - fees)/avg.balance
(2,500 - 1,750)/100,000 = 0.0075

Question

Quizplus · Accepted Answer

The implicit interest rate is calculated by subtracting the fees from the costs and dividing by the average balance. Here, (2,500 - 1,750)/100,000 = 0.0075, which is 0.75 percent.

What Is the Average Implicit Interest Rate on a $100,000