Lou had $1,000 in his savings account at the beginning of a period.He then deposited $1,000 and later withdrew $500.Under the minimum balance method,interest would be paid on $1,500 for the full period.

Question

Quizplus · Accepted Answer

Under the minimum balance method, interest is calculated based on the minimum balance in the account during the period, not the total amount deposited. In this case, the minimum balance would be $500 ($1,000 - $500 withdrawal), so interest would be paid on $500, not $1,500.

Lou Had $1,000 in His Savings Account at the Beginning