The ABC Bank has an early withdrawal policy for certificates of deposit (CDs) which states that interest still be credited for the entire length the money actually stays with the bank, but the CD nominal interest rate for last kk months will be reduced by 1.5%, where

kk = (number of months of full term) −− (actual number of months)

An incoming college freshman invests $7000 in a two-year CD with a nominal rate of interest equal to 5.75% compounded monthly on September 1 at the beginning of the freshman year. The student intended to leave the money on deposit for the full two-year term to help finance the junior and senior years. but finds the need to withdraw it on April 1 of the sophomore year.

Find the amount that the student will receive for the CD on that date.

Answer rating: 100% (QA)

The student invested 7000 in a twoyear CD with a nominal rate of interest of ... View the full answer