Question

A bank offers a saving account with 4.5% compounded quarterley. Find the APY the bank's savings account offers (round your answer to the three decimal places).

Answer 1

Hope this helped you!

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Answer 2

4.577%

Explanation:

Here we have to use formula APY =
`( 1 + (r)/(n) )^n -1`

r= stated annual interest rate

n = number of times compounded

Here r = 4.5% = 0.045

n = 4 because it is calculated quarterly.

Now plug in r =0.045 and b = 4 in the above formula, we get

APY = (1 + 0.045÷4)^4 - 1

= (1 + 0.01125)^4 - 1

= 1.01125^4 - 1

= 1.045765 - 1

= 0.045765

To find the percentage multiply by 100, we get

= 4.577%

Thank you.