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The Trim Gym has a monthly collected balance of $500,000. Simmons First Bank (the Trim Gyms relationship lender) pays an earnings credit rate of 0.60%.
The Trim Gym has a monthly collected balance of $500,000. Simmons First Bank (the Trim Gyms relationship lender) pays an earnings credit rate of 0.60%. The reserve requirement ratio is 10%.
a. If there are 30 days in the month, calculate the Trim Gyms monthly earnings credit.
b. Suppose that the owner of the Trim Gym is able to renegotiate the earnings credit rate to 0.75%. By how much will the earnings credit increase from your answer in part a?
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