Suppose you buy a CD for $500 that earns 3% 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 Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.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?
A. $5.00
B. $2.50
C. $1.25
D. $3.75

Question

Suppose you buy a CD for $500 that earns 3% 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 Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest.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?
 		A.	$5.00
 		B.	$2.50
 		C.	$1.25
 		D.	$3.75

anonymous · Answer

D due to the 3 percent of 500 is 15 dollars so divide this by four as if is three months so it equals 3.78. compounded quarterly is every threee months but in this case it doesnt apply as the timit doesnt extend the 3 months so therefore the compunded interest is no longer needed

anonymous · Answer

thanks(: