Question

An ATM allows a customer to withdraw a maximum of $\mathrm{\$}500$ per day. If a customer withdraws more than $\mathrm{\$}300$, the service charge is $4\mathrm{\%}$ of the amount over $\mathrm{\$}300.$ If the customer does not have sufficient money in the account, the ATM informs the customer about the insufficient funds and gives the customer the option to withdraw the money for a service charge of $\mathrm{\$}25.00.$ If there is no money in the account or if the account balance is negative, the ATM does not allow the customer to withdraw any money. If the amount to be withdrawn is greater than $\mathrm{\$}500$, the ATM informs the customer about the maximum amount that can be withdrawn. Write an algorithm that allows the customer to enter the amount to be withdrawn. The algorithm then checks the total amount in the account, dispenses the money to the customer, and debits the account by the amount withdrawn and the service charges, if any.

Short answer

Create an algorithm to handle withdrawal requests, considering limits, balances, and service charges.

Step-by-step solution

Understand the Problem

Define the limits and constraints set by the ATM: maximum withdrawal of $500, service charge of 4% for withdrawals over $300, additional provision for insufficient funds with a $25 service charge, and no withdrawal if account balance is zero or negative.

Check Maximum Withdrawal

If the customer requests more than $500, inform them that the withdrawal limit is $500 and ensure the withdrawal amount is adjusted accordingly.

Check Account Balance

Determine if the account balance is sufficient. If the balance is zero or negative, inform that withdrawal is not possible. If insufficient but positive, offer the option to withdraw with a $25 service charge.

Calculate Service Charge for Large Withdrawals

For withdrawals greater than $300, calculate the service charge as 4% of the amount exceeding $300. Add this charge to the total withdrawal cost.

Dispense and Debit

Dispense the requested amount to the customer. Deduct the withdrawn amount and any applicable service charges from the account balance.

Key concepts

Service Charge Calculation

Starting with service charge calculation, it's important to identify when and how extra fees are applied during an ATM withdrawal. Services charges come in when specific conditions are met or exceeded. In our case, this additional fee is a percentage of the amount exceeding a predefined threshold—\(300.

To calculate the service charge:

• Check if the requested withdrawal amount is greater than \)300.
• Calculate the excess amount by subtracting \(300 from the total withdrawal.
• Compute the service charge using 4% as the rate of the excess.

For example, if a customer wishes to withdraw \)350, the service charge is calculated on the extra $50,resultinginachargeof$2, as $$0.04\times 50=2$$. This charge should be added to the total transaction amount, keeping account balance deductions accurate for the customer.

Account Balance Verification

Account balance verification is a crucial step before processing any withdrawal. It ensures that the customer’s account can support the intended transaction.

Here’s how verification is typically conducted:

• First, confirm if the account balance is negative or zero. If true, prohibit any withdrawal attempts.
• If the balance is insufficient (but still positive), inform the customer about an option of proceeding by accepting an additional $25 service charge.

This check guarantees that the ATM operates under rules that prevent overdraft situations unless explicitly permitted by increased service fees. It helps maintain the integrity of financial operations and keeps customers informed about their financial standings before confirming any transactions.

Withdrawal Limits

Withdrawal limits are important as they define the confines under which transactions can be processed. In this particular scenario, the ATM restricts any single-day withdrawal to a maximum of $500.

To ensure adherence to these limits:

• Upon entering a withdrawal request, the ATM checks if it exceeds $500.
• If it does, the system should promptly inform the customer about the limit and adjust the withdrawal request to comply, generally resulting in multiple transactions if larger amounts are needed over consecutive days.

These limits help manage liquidity and reduce risks, such as fraud or insufficient funds in the ATM, benefiting both banking institutions and clients through clear, consistent guidelines.

Algorithm Design Steps

Designing an algorithm for ATM withdrawals involves structuring logical operations that evaluate and execute customer requests.

The crucial steps are:

• Input Handling: Allow the customer to enter their desired withdrawal amount and acquire their current account balance.
• Logic Implementation: Embed conditions to check if requested amounts escalate beyond $500 and validate sufficient account balance.
• Service Charges: Compute applicable charges and adjust the total deduction accordingly, ensuring all fees align with set rules.
• Transaction Execution: Dispense money and adjust the account by debiting both the withdrawal amount and any service charges.

This structured approach certifies that every withdrawal process is seamless, secure, and client-friendly, reinforcing both service efficiency and customer trust in automated financial transactions.