Find the annual percentage yield (APY) in the following situation.
A bank offers an APR of 3.28% compounded monthly
Find the annual percentage yield (APY) in the following situation.
A bank offers an APR of 3.28% compounded monthly
3.28% means=3.28 / 100 =.0328 in decimal form. But, because it is compounded monthly, you must divide it by 12, thus:.0328 / 12 =0.002733333.................etc. Now, you add 1 to it thus:
[1 + .0027333333], and raise it to 12th power:
1.0027333333^12=1.03329761... - 1 =.03329761 X 100 =3.329761% This is the EFFECTIVE annual percentage yield.
