CH4.5. Impact on Taxes. From CH4.4, if Jacques had forgotten a $2,000 tax credit (instead of a $2,000 tax deduction), how would his taxes be affected?

For questions CH5.1, CH5.2, and CH5.3	Hillsboro Bank	First National	South Trust Bank	Sun Coast Bank
ATM Charges
Home bank	Free	Free	Free	Free
Other bank	4 free then $2 per use	$1.25	$1 .25	$1.25
Checking
Minimum deposit	$100	$25	$1	$1
Minimum balance required to avoid fees*	N/A	N/A	$400	N/A
Monthly fees	$6	$7	$13	$2.5
Check-writing charges	12 free, then $1 per check	7 free, then $1 per check	Unlimited	Each check 50 cents

CH5.1. Selecting a Bank. Julie wants to open a bank account with $75. Julie estimates that she will write 20 checks per month and use her ATM card at the home bank. She will maintain a $200 balance. Which bank should Julie choose?

CH5.2. Selecting a Bank. Marcelline plans to open a checking account with her $1,400 tax refund check. She believes she can maintain a $500 minimum balance. Also, she estimates that she will write 10 checks per month and will use other banks' ATMs as many as 15 times per month. Which bank should Marcelline choose?

CH5.3. Check Writing Fees. Randy, a student, has $500 to deposit in a new checking 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 checks. Randy is trying to choose between the unlimited check writing offered by South Trust Bank and the low per check fee offered by Sun Coast Bank. How many checks would Randy have to write each month for the account at South Trust Bank to be the better option?

CH5.4. Checking Account Balance. Oliver has an account at St. Jerome Bank. He does not track his checking account balance on a checkbook register. Yesterday evening, he placed 2 checks in the mail for $187.66 and $233.94. Oliver accesses his account online and finds that his balance is $538.40, and all the checks he has written except for the 2 checks from yesterday have cleared. Based on his balance, Oliver writes a check for a new stereo for $225.00. Oliver does not intend to make a deposit in the near future. What are the consequences of his actions?

CH5.5. Adjusted Bank Balance. Mary's last bank statement showed an ending balance of $175.51. This month, she deposited $400 in her account and withdrew a total of $239.00. Furthermore, Mary wrote 5checks, 2 of which have cleared. The 2 checks that have cleared total $143.00. The 3 remaining checks total $109.09. Mary pays no fees at her bank.

CH5.5.a. What is the ending bank balance on Mary's bank statement?

CH5.5.b. What is the adjusted bank balance?

CH5.6. Selecting a CD. Divya has $1,000 to invest in a certificate of deposit. Her local bank offers her 4.3% on a 12-month FDIC-insured CD. A nonfinancial institution offers her 8.5% on a 12-month CD.

CH5.6.a. What is the risk premium?

CH5.6.b. What else must Divya consider in choosing between the 2 CDs?