Ottawa Bank (OB) is examining the profitability of its Premier Account, a combined savings and chequing account. Depositors receive a 6% annual interest rate on their average deposit. OB earns an interest rate spread of 2.5% (the difference between the rate at which it lends money and the rate it pays depositors) by lending money for residential home loan purposes at 8.5%. Thus, OB would gain $250 on the interest spread if a depositor had an average Premier Account balance of $10,000 in 2019 ($10,000 cx 2.5% = $250). The premier Account allows depositors unlimited use of services such as deposits, withdrawals, chequing account, and foreign currency drafts. Depositors with Premier Account balances of $2,500 or more receive unlimited free use of services. Depositors with minimum balances of less than $2,500 pay a $35 monthly service fee for their Premier Account OB recently conducted an activity-based costing (ABC) study of its services. It assessed the following costs for six individual services. The use of these services in 2019 by three Premier Account customers is as follows: ABC Cost Account Usage per Robinson Skerrett Farrel Transaction Deposits/withdrawals with teller $4.00 45 55 10 Deposits/withdrawals at ATM $1.20 12 24 18 Prearranged monthly deposit/withdrawal $0.80 0 15 60 Cheques written $11.25 10 5 4 Foreign currency drafts $12.50 4 1 7 Account balance inquiries $2.50 12 20 11 Average cash balance $2,600 $1,200 $40,000 Assume Robinson and Farell always maintain a balance above $2,500 while Skerrett always has a balance below $2,500 in 2019. Required: 1. Compute the 2019 profitability of the Robinson, Skerrett, and Farrel Premier Accounts at OB. 2. What evidence is there of cross-subsidization across Premier Accounts? Why might OB worry about this cross-subsidization if the Premier Account product offering is profitable as a whole? 3. What changes at IT would you recommend for its Premier Account