What is the annual opportunity cost of a checking account that requires a minimum balance of...

What is the annual opportunity cost of a checking account that requires a minimum balance of $240 to avoid service charges? Assume an interest rate of 2.5 percent. Round your answer to 2 decimal places.

Expert Solution

Annual opportunity cost is the cost of losing interest on the balance which does not pay off interest.

Checking account does not pay interest on the balance available in it unlike saving accounts.

Therefore Annual opportunity cost = Minimum balance * Interest rate = 240 *2.5* = $6.00

jeff jeffy answered 2 years ago

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