Suppose you buy a CD for $400 that earns 2.5% APR and is compounded quarterly. The CD matures in 5 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 Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.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?

A. $6.25
B. $2.50
C. $1.25
D. $3.13

Question

04-11-2016
Mathematics

contestada

Suppose you buy a CD for $400 that earns 2.5% APR and is compounded quarterly. The CD matures in 5 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 Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.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?

A. $6.25
B. $2.50
C. $1.25
D. $3.13

Respuesta :

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syed514 syed514 · Answer 1 · 2016-11-08T15:22:23+01:00

syed514 syed514

08-11-2016

The withdrawal fee will not take the compund rate, so, you should apply the usual formula for not compound rate,
400⋅0.025/12⋅3=2.50

Where we divide the APR to adapt to a monthly base, and then multiply the number of months.

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learnerearner learnerearner · Answer 2 · 2018-08-12T22:31:54+02:00

learnerearner learnerearner

12-08-2018

The answer is $2.50

Answer Link

Suppose you buy a CD for $400 that earns 2.5% APR and is compounded quarterly. The CD matures in 5 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 Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.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? A. $6.25 B. $2.50 C. $1.25 D. $3.13

Respuesta :

Otras preguntas

Suppose you buy a CD for $400 that earns 2.5% APR and is compounded quarterly. The CD matures in 5 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 Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.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?

A. $6.25
B. $2.50
C. $1.25
D. $3.13