Suppose you buy a CD for $1000 that earns 2.5% APR and is compoundedquarterly. The CD matures in 5 years. Assume that if funds are withdrawnbefore the CD matures, the early withdrawal fee is 3 months' interest. What isthe early withdrawal fee on this account?A. $3.13B. $1.25C. $6.25D. $3.75

The early withdrawal fee on this account is $6.25Step-by-step explanation:Suppose you buy a CD for $1000It earns 2.5% APR and is compounded  quarterlyThe CD matures in 5 yearsAssume that if funds are withdrawn  before the CD matures, the early withdrawal fee is 3 months' interestWe need to find the early withdrawal fee on this account∵ The annual interest is 2.5%- Change it to decimal∵ 2.5% = 2.5 ÷ 100 = 0.025∴ The annual interest rate is 0.025∵ The interest is compounded quarterly∴ The interest rate per quarter = 0.025 ÷ 4 = 0.00625∵ The early withdrawal fee is 3 months' interest∵ You buy the CD for $1000∵ A quarter year = 3 months∴ The early withdrawal fee = 1000 × 0.00625 = $6.25The early withdrawal fee on this account is $6.25Learn more:You can learn more about the interest in brainly.com/question/11149751#LearnwithBrainly