Question

Rachel invested $15,000 in a nine-year CD giving 8.5% interest, but needed to withdraw $4,000 after two years. If the CD's penalty for withdrawal was six months' worth of interest on the amount withdrawn, how much money did Rachel have when the CD reached maturity, not including the amount she withdrew? Round answer to the nearest whole dollar.

Answer 1

Hi there:)

Let's translate this question into numerical data
First find the interest for two years
15,000×0.085×2=2,550
Now exclude 4000 from the amount invested 15000-4000=11000
(CD's penalty for withdrawal is 4,000×0.085×(6÷12)=170)
After that find the interest for the rest of the time
11,000×0.085×7=6,545
how much money did Rachel have when the CD reached maturity, not including the amount she withdrew

11,000+2,550−170+6,545=19,925

Hope it helps