Rita has $2,000 she considers her emergency fund. Rita keeps the money in a 2-year CD at her local bank. The CD offers 0.70% annual interest and charges 2 months of interest if the CD is cashed in before it matures.

a. Calculate the value of the CD after one year. (Hint: be careful about the decimal places!)

b. Suppose she has an unexpected car repair of $1,000 and must cash in the CD. What is the penalty charged for cashing in the CD early? (Hint: find a monthly rate, treating the annual rate as an APR.)

c. What does Rita have left after cashing in the CD and spending the $1,000 repair costs?