APY-math

posted by JT

find the annual percentage yield (to the nearest 0.01%). a bank offers an APR of 3.1% compounded daily.

  1. Scott

    e^(rt) = e^(.031 * 1)

  2. JT

    thank you

  3. Reiny

    let the equivalent annual rate be i
    daily rate = .031/365 = .000084931
    1.000084931^365 = 1+i
    1+i = 1.031484143
    i = annual = .03148

    annual rate = .03148 or appr 3.15%

    Scott's answer would be the instantaneous rate at .0314855
    which of course would be very close to the daily compounded rate

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