1 / 3

Bank account balances

Bank account balances. Often, banks will pay interest on the ‘minimum monthly balance’, that is, the lowest amount

rollo
Download Presentation

Bank account balances

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Bank account balances Often, banks will pay interest on the ‘minimum monthly balance’, that is, the lowest amount the account contains in each calendar month. Banks may also offer accounts that pay interest on the ‘daily balance’.When interest is paid ontheminimumdaily balance then you should note that when money isdepositedthe dailybalance used for the interest calculation is the amount in the account before the deposit wasmade, but when money iswithdrawnthen the daily balance used for the interest calculation isthe amount in the account after the withdrawal. Example:The table shows the entries in Tom’s bankbook. If the bank pays interest at a rate of 3.75% per annum on the minimummonthly balance, find the interest payablefor the month of June. Solution: Minimum balance = 700 Interest = 700 × 3.75 × 1 = $ 2.19 100 × 12

  2. Example:Andrea receives a statement from thebank which gives the detail of herinvestment account from 1 July until31 December, 2005. The details areas shown. How much interest has been earned on this account if the bank pays simple interest of 4.5% per annum on the minimum daily balance? Solution: Minimum balance 1st July- 8th August (31 +8 days) = $2000 Interest = 2000 × 4.5 × 39 = $ 9.6 100 × 365 Minimum balance 9ht August- 10th September (23 +10) = $2360 Interest = 2360 × 4.5 × 33 = $ 9.6 100 × 365 Minimum balance 11ht September- 31th December (20 +31 +30 +31 ) = $3723.40 Interest = 3723.40 × 4.5 × 112 = $ 51.4 100 × 365 Total Interest = 9.6 + 9.6 + 51.4 = $70.6

  3. Example:The bank statement below showstransactions over a one-month periodfor a savings account that earns simpleinterest at a rate of 3% per annumcalculated daily and paid monthly. aHow much interest is earned in this month? bIf interest is calculated on a minimum monthly balance instead, how much is earned thismonth? Solution:aMinimum balance 1st May- 5th May (5 days) = $650.72 Interest = 650.72 × 3 × 5 = $ 0.27 100 × 365 Minimum balance 6ht May- 19th May(14 days) = $445.82 Interest = 445.82 × 3 × 14 = $ 0.51 100 × 365 Minimum balance 20ht May- 31th May (12 days ) = $1241.37 Interest = 1241.37 × 3 × 12 = $ 1.22 100 × 365 Total Interest = 0.27 + 0.51 + 1.22 = $2 b. Minimum monthly balance = $ 445.82 Interest = 445.82 × 3 × 1 = $ 1.11 100 ×12

More Related