Question

Barbara deposits $3,000 in a one year CD at 4.1% interest, compounded

daily. What is the APY to the nearest hundredth of a percent?

Answer 1

4.184%

Explanation:

Barbara deposits $3000 in a one year CD account at 4.1% interest per year i.e.
`(4.1)/(365)` % =0.01123% per day, compounded daily.

So, after one year the sum will become
`3000[1+(0.01123)/(100) ]^(365)`

= $3.125.52

Hence, total interest that he gets = $( 3125.516 - 3000) = $125.516.

Therefore, the APY that he get per year =
`(125.516 * 100)/(3000)` = 4.184% (rounded to the nearest hundredth of the percent)

(Answer)