Question

Orlando invested $16,000 in an eight-year CD bearing 6.5% simple annual interest, but needed to withdraw $3,500 after five years. If the CDâs penalty for early withdrawal was one yearâs worth of interest on the amount withdrawn, when the CD reached maturity, how much less money did Orlando earn total than if he had not made his early withdrawal?

Answer 1

Answer:

$3,640

Step-by-step explanation:

Money Invested= $ 16,000

Interest = 6.5%

Money withdrawn=$3,500

penalty of one year profit

Now profit earned in one year = Money invested * Interest

                                                   =16,000 * 6.5 %

 solving it gives

                                                   =$ 1,040

He withdrawn amount = $ 3,500

Also a penalty of $1,040

Total loss = $3,500 + 1,040

                =$3,640