Question 1191033
the investment is 116000 in an 8 year cd at 6.5% simple interest.
the interest on the cd would be p * r * n = 16000 * .065 * 8 = 8320.
if he withdrew 3500 after 5 years with no penalty, then his interest would have been 16000 * .065 * 5 + 12500 * .065 * 3 = 7637.5
the penalty on the withdrawal was one year's worth of interest on the amount withdrawn.
that would be 3500 * .065 = 227.5
subtract that from 7637.5 and he would have made 7410 instead of 7637.5.


i made a chart to show the yearly  transactions.
here it is .


<img src = "http://theo.x10hosting.com/2022/021801.jpg" >


if he did not take out the 3500 at the end of year 5, his total interest would have been 8320.
since he took out 3500 at the end of year 5, his total interest with the penalty was 7410.


this was 3 years loss of interest on 3500 each year plus 1 year loss of interest on 3500 because of the penalty = 4 years loss of interest on 3500 each year * .065 * 4 = 910 less interest than if he did not make any withdrawal until the term of the CD was completed.