Question

A bank offers a four year cd with an interest rate of 2.75%. The penalty for early withdrawal from the CD is nine months of simple interest, calculated on the amount withdrawn. Rachel invests $6,200. If she withdraws $2250 after one year, how much will the penalty be? Round answer to the nearest dollar.

Answer 1

A

Explanation:

Edge 2020, for those who doing edge :P

Answer 2

The penalty will be $46

Explanation:

we know that

The simple interest formula is equal to

`I=P(rt)`

where

I is the Final Interest Value

P is the amount withdrawn

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=9/12\ years\\ P=\$2,250\\r=0.0275`

substitute in the formula above

`I=2,250(0.0275)(9/12)`

`I=\$46`