Case study 2 Community Savings Bank (CSB) is examining the profitability of its Premier Account, a combined savings and cheque account. Depositors receive a 2.05% annual interest rate on their average deposit. CSB earns an interest rate spread of 2.95% (the difference between the rate at which it lends money and the rate it pays depositors) by lending money for home- loan purposes at 5%. Thus, CSB would gain $59 on the interest spread it a depositor had an average Premier Account balance of $2,000 ($2,000 * 2.95% = $59). The Premier Account allows depositors unlimited use of services such as deposits, withdrawals, checking accounts and foreign currency drafts. Depositors with Premier Account balances of $5,000 or more receive unlimited free use of services. Depositors with minimum balances of less than $5,000 pay a $25 per month service fee for their Premier Account. CSB recently conducted an activity-based costing study of its services. It assessed the following costs for six individual services. The use of these services in 2020 by three customers is as follows: Activity based transaction Deposit I withdrawal with teller $3.25 3 10 15 Deposit / withdrawal at ATM Machines $0.85 25 30 50 -m--tlm-m nn-nl --- Assume that Candy and Pondy always maintain a balance above $5,000, whereas Sandy always has a balance below $5,000. Required (1) Calculate the profitability of the Candy, Sandy and Pondy Premier accounts at CSB. (2) Recommend TWO changes for CSB's Premier account to increase its profitability? (8 + 2 = 10 Marks)