Answer :
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To determine if you are getting ahead by putting [tex]$500 in an interest-bearing bank account that pays 2% per year but has a $[/tex]2 monthly fee, you need to consider the following:
1. Calculate Annual Interest Earned:
- The annual interest earned on [tex]$500 at 2% per year is calculated as: $[/tex]500 * 2% = [tex]$10. 2. Calculate Annual Fee: - The annual fee for the account is $[/tex]2/month * 12 months = [tex]$24 per year. 3. Net Gain/Loss Calculation: - Subtract the annual fee from the annual interest earned: $[/tex]10 (interest) - [tex]$24 (fee) = -$[/tex]14.
4. Interpretation:
- Since the result is a negative value ([tex]$14), it means that after considering the interest earned and the fees paid, you are not getting ahead. You are actually losing $[/tex]14 in total annually.
Therefore, the correct answer to the question "Are you getting ahead?" is b) No.
To determine if you are getting ahead by putting [tex]$500 in an interest-bearing bank account that pays 2% per year but has a $[/tex]2 monthly fee, you need to consider the following:
1. Calculate Annual Interest Earned:
- The annual interest earned on [tex]$500 at 2% per year is calculated as: $[/tex]500 * 2% = [tex]$10. 2. Calculate Annual Fee: - The annual fee for the account is $[/tex]2/month * 12 months = [tex]$24 per year. 3. Net Gain/Loss Calculation: - Subtract the annual fee from the annual interest earned: $[/tex]10 (interest) - [tex]$24 (fee) = -$[/tex]14.
4. Interpretation:
- Since the result is a negative value ([tex]$14), it means that after considering the interest earned and the fees paid, you are not getting ahead. You are actually losing $[/tex]14 in total annually.
Therefore, the correct answer to the question "Are you getting ahead?" is b) No.