Question

A bank advertises an interest rate of 4% per year, compounded monthly

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What is the APY?
The units are percent, but do not enter the % sign. Round 2 decimal places,
Note: if your answer is 5.24%, then enter only 5.24

Answer 1

Given :

Interest rate , r = 4 %.

To Find :

The APY .

Solution :

APY is given by :

`APY=(1+(r)/(n))^n-1`

Here , r is compound interest and n is number of time compounded .

So ,

`APY=(1+(r)/(n))^n-1\\\\APY=(1+(4)/(12))^(12)-1\\\\APY=30.57\%`

Therefore , APY is 30.57 % .

Hence , this is the required solution .