Question

What is the APY for money invested at each rate?(A) 14% compounded semiannually(B) 13% compounded continuously

Answer 1

Answer:

Step-by-step explanation:

APY means Annual Percentage Yield

The APY is given by the formula:

`\text{APY}=\lbrack(1+(r)/(n)\rbrack^n-1`

where r is the rate (in decimals)

n is the number of times the interest was compounded

A) For the money invested at 14% compounded semiannually

r = 14% = 14/100

r = 0.14

n = 2

Substitute n = 2, r = 0.14

`\begin{gathered} \text{APY = \lbrack{}1+}(0.14)/(2)\rbrack^2-1 \\ \text{APY}=\lbrack1+0.07\rbrack^2-1 \\ \text{APY}=\lbrack1.07\rbrack^2-1 \\ \text{APY}=0.1449 \\ \text{APY}=0.1449*100\text{ \%} \\ \text{APY}=14.49\text{ \%} \end{gathered}`

B) For the money invested at 13% compounded continuously