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 The penalty for early withdrawal from the CD is nine months of simple interest, calculated on the amount withdrawn.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

Answer:

The penalty will be $46

Step-by-step 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P is the amount withdrawn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

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

$I=\ 46$