Posted by marie on Sunday, August 14, 2011 at 5:47pm.
Using the present value formula
you deposit $12,000 in an account that pays 6.5% interest compounded quarterly.
A. find the future value after one year?
B. Use the future value formula for simple interest to determine the effective annual yield?

math  Henry, Sunday, August 14, 2011 at 8:29pm
A. Pt = Po(1+r)^n,
r = 6.5% / 4 = 1.625% = 0.01625 = Quarterly % rate expressed as adecimal.
n = 4 comp./yr * 1 yr = 4 compounding
periods.
Pt = 12,000(1.01625)^4 = $12,799.22.
B. APY = I/Po.
I=Pt  Po = 12,799.22  12,000 = 799.22
= Interest.
APY=(799.22/12000)*100% = 6.66%.=Annual
Percentage Yield.

math  Henry, Sunday, August 14, 2011 at 8:39pm
Formula: APY = (PtPo) / Po
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