Answer:
Option D.
Explanation:
It is given that Irene invested $27,000 in a twelve-year CD bearing 8.0% interest.
Total interest = Principal × Rate × Time
Principal = $27,000
Rate = 8% = 0.08
Time = 12 years
[tex]\text{Total interest}=27000\times 0.08\times 12=25920[/tex]
Irene earn total $25,920 if she had not made her early withdrawal.
If she withdraw $6000 after three years, then the total interest is
[tex]\text{Total interest}=27000\times 0.08\times 3+(27000-6000)\times 0.08\times (12-3)[/tex]
[tex]\text{Total interest}=6480+21000\times 0.08\times 9[/tex]
[tex]\text{Total interest}=6480+15120=21600[/tex]
If the CD’s penalty for early withdrawal was eighteen months’ worth of interest on the amount withdrawn.
[tex]\text{Penalty}=6000\times 0.08\times \frac{18}{12}=720[/tex]
[tex]21600-720=20880[/tex]
Irene earn total $20880 if she had made her early withdrawal.
[tex]25920-20880=5040[/tex]
Irene earn $5,040 less money if she had made her early withdrawal.
Therefore, the correct option is D.
