Calculate Average Implicit Interest Rate And Gross Interest Return Calculation

1. What is the average implicit interest rate on a $100,000 account if the bank's average management costs are $2,500 and annual fees average $1,750?
    a.    4.25 percent.
    b.    2.50 percent.
    c.    1.75 percent.
    d.    0.75 percent.
    e.    -0.75 percent.

2. An FI offers a $2,500 minimum balance NOW account paying 4 percent annual interest, and there are no service charges as long as the customer maintains the minimum balance.  The customer maintains a balance of $5,000, and averages 750 checks per year.  Each check has a processing cost to the FI of $0.15.  What is the annual gross interest return on this account to the customer?
    a.    $112.50.
    b.    $100.00.
    c.    $312.50.
    d.    $137.50.
    e.    $212.50.


These multiple choice questions belong to Finance. The 1st question is about calculating the average implicit interest rate for $100,000 with average management cost and annual fees added. The 2nd question is about calculation of gross interest return by a bank which offers $2500 minimum balance account and 4% interest rate.

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