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13 October, 18:25

Suppose you buy a CD for $900 that earns 8% 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 Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.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?

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  1. 13 October, 20:52
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    A=p (1+i/m) ^mn

    A=900 * (1+0.08:4) ^ (4*3/12)

    A=918

    I=900-918=18

    So the early withdrawal fee is 18
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