business math

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. Compute the amount of compound interest earned in 1 year for an investment of $1,000,000 with a nominal interest rate of 8% compounded quarterly.

Compute the Annual Percentage Yield (APY) for the investment in the previous question. (Round APY to the nearest hundredths of a percent.)

  • business math -

    1. P = Po*(1+r)^n

    r = (8%/4)/100% = 0.02 = Quarterly %
    rate expressed as a decimal.

    n = 4Comp /yr * 1yr = 4 Compounding
    periods.

    P = 1,000,000(1.02)^4 = 1,082,432.16
    Int. = P-Po

    2. APY = (I/Po)*100% =

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