Posted by **Anonymous** on Friday, October 29, 2010 at 3:42pm.

What is the APY for money invested at each rate? (A) 6% compounded monthly (B) 4% compoumded continuously

- math -
**Henry**, Saturday, October 30, 2010 at 11:53pm
APY = (1 + r)^n - 1.

A. r = APR / 365 = rate per compounding

period expressed as a decimal.

n = 365 days=the number of compounding

periods.

APY = (1 + 0.00016438)^365 - 1,

= 1.061830 - 1 = 0.061830 = 6.183%

- math -
**Henry**, Monday, June 9, 2014 at 9:54pm
Correction:

P = Po(1+r)^n

A. Let Po = $1.00 @ 6% for 1 year.

r = (6%/12)/100% = 0.005 = Monthly% rate

expressed as a decimal.

n = 1comp/mo. * 12mo. = 12 Compounding

periods.

P = 1(1.005)^12 = 1.06168.

I = P - Po = 1.06168 - 1.000 = $0.06168

APY = (I/Po)*100% = (0.06168/1.0)*100% =

6.168%.

B. P = Po*e^(rt)

r = (4%/100% = 0.04 = APR expressed as a decimal.

t = 1 yr.

rt = 0.04/yr. * 1yr = 0.04

P = 1.0*e^0.04 = $1.04081

I = 1.04081 - 1.00 = $0.04081

APY = (I/Po)*100% = 0.04081/1.00)*100% =

4.081%

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