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 describes which customer is more profitable for the bank.