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3 August, 05:09

If the interest rate on a savings account is 0.02%, approximately how much money do you need to keep in this account for 1 year to earn enough interest to cover a single $9.99 Below-Minimum-Balance Fee?

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  1. 3 August, 06:24
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    This problem reflects pretty much what consumers are dealing with every day!

    Let P=minimum balance required to generate enough interest to pay for a 9.99 fee (probably monthly).

    Annual Interest rate, i = 0.02%

    Then, assuming annual compounding

    9.99=P (0.0002)

    P=9.99/0.0002=$49950

    Answer: With a deposit of $49950 over one year, there will be $9.99 to pay for a single $9.99 "below-minimum-balance" fee.
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