Lucky Louie's bank requires a minimum balance at all times of $1500 in order to provide free checking services. The bank pays .5% per annum interest on the minimum balance. If you do not maintain the balance, account service fees are $4 per month. Assuming Lucky can earn 2.5% on his money not sitting at the bank, what is his net benefit to maintaining the minimum balance?
A) Not a benefit; he should invest his money elsewhere at 2.5%
B) $18 per year benefit
C) $48 per year benefit
D) Breakeven

Question

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The Answer of Lucky Louie's bank requires a minimum balance at all times of $1500 in order to provide free checking services. The bank pays .5% per annum interest on the minimum balance. If you do not maintain the balance, account service fees are $4 per month. Assuming Lucky can earn 2.5% on his money not sitting at the bank, what is his net benefit to maintaining the minimum balance?
A) Not a benefit; he should invest his money elsewhere at 2.5%
B) $18 per year benefit
C) $48 per year benefit
D) Breakeven

Lucky Louie's Bank Requires a Minimum Balance at All Times