Question

Karl invests $35,000 for 8 years in an account paying 7% compounded daily. Find

the annual percentage yield (APY) to the nearest hundredth of a percent. *
a.9.38%
b.12.72%
c.10.14%
d.11.36%

Answer 1

principal (p)=$35000

time(t)=8years

rate ( r)=7%

Explanation:

• compounded amount(c.a)=p((1+r/100)^t )=$35000((1+7/100)^8)=$60136.5
• compound interest gain=$60136.5-$35000=$25136.5
• Karl gain interest in 1 year=$35000((1+7/100)-1)=$2450
• gain % in 1 year=$2450/$25136.5×100%=9.74%