Question

If the APR of a savings account is 3.6% and interest is compounded monthly, what is the approximate APY of the account?

Answer 1

The Answer is ''3.66%''

Answer 2

Answer:

3.66% ( approx )

Step-by-step explanation:

Since, the formula of annual percentage yield is,

$APY = (1+\frac{r}{n})^n-1$

Where,

r = stated annual interest rate,

n = number of compounding periods,

Here, r = 3.6% = 0.036,

n = 12 ( ∵ 1 year = 12 months )

Hence, the annual percentage yield is,

$APY=(1+\frac{0.036}{12})^{12}-1=1.03659 - 1 = 0.036599\approx 0.0366 = 3.66\%$