Question

Wendy winholtz 8 year savings certificate pays an annual interest rate of 5.3% at the end of 5 years she cashed out the 6,000 CD and paid a penalty of 12 month simple interest. What penalty did she pay

Answer 1

318

Explanation:

The rate of 5.3% is an annual rate, and specifies the amount of interest earned in a 12-month period by the principal amount of the CD. The interest amount is found by multiplying the interest rate by the principal amount.

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penalty

The amount of the penalty is 5.3% of 6000:

0.053 × 6000 = 318

Wendy paid a penalty of 318 for her early withdrawal.