Use of Financial Calculator TI BA II Plus required. A bank chequing account charges a service fee of $12 per month. What would be the rate of interest you would need to earn from the bank on a $1000 deposit annually to cover the service charges?

Question

Quizplus · Accepted Answer

To cover a $12 monthly service fee, you need $144 annually. To find the interest rate that would generate $144 on a $1000 deposit, use the formula: Interest = Principal x Rate. Solving for Rate gives Rate = Interest / Principal = $144 / $1000 = 0.144 or 14.4%. However, since 14.4% is not an option, the closest available option is 13.5%.

Use of Financial Calculator TI BA II Plus Required