Question

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

Answer 1

Given :

Interest rate , r = 4 %.

To Find :

The APY .

Solution :

APY is given by :

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

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

So ,

$APY=(1+\dfrac{r}{n})^n-1\\\\APY=(1+\dfrac{4}{12})^{12}-1\\\\APY=30.57\%$

Therefore , APY is 30.57 % .

Hence , this is the required solution .