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Question
A bank estimates that their average balance on demand deposit accounts is $2,500, net of float. Each account costs the bank $175 per year in processing costs. The bank collects an average of $5 per month on each account in service charges. Assume reserve requirements are 10%.What is the net cost of an average demand deposit?
a. 4.5%
b. 4.8%
c. 5.1%
d. 6.8%
e. 7.0%
Answer
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