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Costs and Revenues

Home Town Bank has two types of individual customers who make demand deposits: college students and regular customers. The bank charges college students$.10 per check but regular customers get free checking service. The bank earns 10% on the customer deposits by lending money to other clients and pays the customers 5% on deposits.

Each type of customer costs the bank $20 in terms of accounting and mailing. The average college student deposit in Home Town Bank is $300 regular customers have average deposits of $1,000 college students write an average of 100 checks per year

Which customer is more profitable for the bank?

Solution Summary

Solution describes which customer is more profitable for the bank.