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7 January, 06:08

Suppose you buy a CD for $500 that's earns 3% APR and is compounded quarterly. The CD matures in 3 years. Assume that if funds are with drawn before the CD matures, the early withdrawal fee is 3 months interest. what is the early withdrawal fee on this account?

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  1. 7 January, 09:42
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    Compounded quarterly means that the interest accrued every 3 months

    Or 4 times a year

    So the early withdrawal fee on this accoun is

    500*0.03 * (1:4) = 3.75
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