Given:
Principal = 16,000
interest rate = 6.5%
term = 8 years
Interest = 16,000 6.5% 8 yrs
I = 8,320 interest earned for the whole 8 years
Total = 16,000 + 8,320 = 24,320
Pretermination. 5 years
Interest = 16,000 6.5% 5 yrs
I = 5,200
Total = 16,000 + 5,200 = 21,200
Amount withdrawn = 3,500
penalty = 3,500 6.5% 1 yr = 227.50
New principal = 16,000 - 3,500 = 12,500
Interest = 12,500 6.5% 3 yrs
I = 2,437.50
Interest w/o pretermination = 8,320
Interest w pretermination = 5,200 + 2,437.50 = 7,637.50
Difference = 8,320 - 7,637.50 = $682.50
Orlando earns less money if he had not made his early withdrawal, the value of the amount lost is B.) $682.50
