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Suppose you buy a CD for $750 that earns 4% APR and is compounded quarterly. The CD matures in 3 years. Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.
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Suppose you buy a CD for $750 that earns 4% APR and is compounded quarterly. The CD matures in 3 years. Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest. What is the early withdrawal fee on this account

User Christopher Esbrandt
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2 Answers

2 votes
the answer i got for this question is $7.50
User Mohamed Farahat
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5.9k points
3 votes

Answer:

$7.5

Step-by-step explanation:

The computation of the early withdrawal fee on this account is shown below:

= CD buying price × annual percentage rate × number of months for withdrawal fee

= $750 × 4% × 3 months ÷ 12 months

= $7.5

Simply we multiplied the buying price of CD with the annual percentage rate and the number of given months for withdrawal fee so that the exact fee amount can come.

User Tugrul Ates
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