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18 October, 16:36

Randy, a student, has $340 to deposit in a new chequing account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card, but will write a large number of cheques. Randy is trying to choose between the unlimited check writing offered by South Trust and the low per-check fee offered by Sun Coast. How many checks would Randy have to write each month for the account at South Trust to be the better option?

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  1. 18 October, 17:32
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    17 cheques per month

    Explanation:

    ATM services and charges are same in both banks

    so, ATM charges is ignore

    lets calculate the break even in cheque drawing between both banks

    Total cost = Fixed cost + Variable cost

    Fixed cost = monthly charges

    Variable cost = cost per check

    For south trust bank the monthly charges is $11

    cost of writing single check is $0

    therefore,

    Total cost = Fixed cost + Variable cost

    lets use X to represent number of order

    = $11 + 0 * X

    For sun coast bank the monthly charges is $2.5

    and $0.5 per check

    therefore,

    Total cost = Fixed cost + Variable cost

    lets use X to represent number of order

    = $2.5 + $0.5 * X

    Equate both the equation

    $11 = $2.5 + $0.5 * X

    $8.5 = $0.5 * X

    X = 17

    so, the number of cheques to be drawn of south trust bank is 17 per month
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