C2. (Fees versus compensating balances) First Bank of New Orleans has the schedule of service
charges given here. Your monthly usage of the services is also given.
a. What is your total service charge for the month?
b. The bank gives you earnings credits equal to the earnings credit rate times your available
balance. If the earnings credit rate is 3.6% (0.3% per month) and your available balance is $300,000, how much in earnings credits did you accumulate during the
c. The bank will invoice you for the difference between service charges and earnings credits
if the earnings credits are insufficient to cover the service charges. Excess earnings
credits are lost. How much do you owe the bank?
d. What available balance is necessary to exactly cover your service charges for the month?