Question

For amounts between $10,000 and $24,999, a credit union pays a rate of 2.5% on term deposits with maturities in the 91- to 120-day range. However, early redemption will result in a rate of 1.75% being applied. How much more interest will a 91-day $20,000 term deposit earn if it is held until maturity than if it is redeemed after 80 days?

Answer 1

I1 = Po*r*t=20000*(0.025/365)*91=124.66

I2 = 20000*(0.0175/365)*80 = 76.71

I1-I2 = 124.66-76.71 = $47.95 More