Question

What is the APY of a savings account with an APR of 3.9886% and compounded quarterly.

Answer 1

Answer:

The APY of the saving account is 4.048656%

Step-by-step explanation:

We know the formula for APY which is given by

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

here, r= interset rate =  3.9886% = 0.039886

n = compounding cycles = 4

On plugging these values in the above formula, we get

$APY=(1+\frac{ 0.039886}{4} )^4-1$

On simplifying this we get

APY = 0.04048656 =4.048656%

Answer 2

Answer:

APY = 4.0486561%

Step-by-step explanation:

Given is the Annual Percentage Rate (APR) = 3.9886% compounded quarterly.

Suppose Principal amount, P = $1.

time, t = 1 year.

interest rate, r = 3.9886% = 0.039886

period of compounding, n = 4 (for quarterly).

Future value = P * (1 + r/n)^(nt)

FV = 1 * (1 + 0.039886/4)^(1*4) = 1.040486561

Annual Percentage Growth = (FV/P)*100 = (1.040486561 / 1) * 100 = 4.0486561%

Hence, Annual Percentage Yield (APY) = 4.0486561%