6. When previously earned interest is added to an investment and then allowed to earn more interest, we say that the interest is compounded. Compounding interest increases the effective interest rate of an investment compared to simple interest, where the interest earned is not added to the investment to earn additional interest. The annual percentage yield, or APY, gives the effective interest rate on an investment based on the number of times the interest is compounded in a year, n, and the interest rate, r, as a decimal. APY = | 1 +-)-1 Find the annual percentage yield if the interest rate is 4% and interest is compounded monthly. State the answer as a percent rounded to the nearest hundredth.
6. When previously earned interest is added to an investment and then allowed to earn more interest, we say that the interest is compounded. Compounding interest increases the effective interest rate of an investment compared to simple interest, where the interest earned is not added to the investment to earn additional interest. The annual percentage yield, or APY, gives the effective interest rate on an investment based on the number of times the interest is compounded in a year, n, and the interest rate, r, as a decimal. APY = | 1 +-)-1 Find the annual percentage yield if the interest rate is 4% and interest is compounded monthly. State the answer as a percent rounded to the nearest hundredth.
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter7: Exponents And Exponential Functions
Section7.8: Transforming Exponential Expressions
Problem 18PFA
Related questions
Question
![6. When previously earned interest is added to an investment and then allowed to
earn more interest, we say that the interest is compounded. Compounding interest
increases the effective interest rate of an investment compared to simple interest,
where the interest earned is not added to the investment to earn additional interest.
The annual percentage yield, or APY, gives the effective interest rate on an investment
based on the number of times the interest is compounded in a year, n, and the interest
rate, r, as a decimal.
APY = | 1 +-)-1
Find the annual percentage yield if the interest rate is 4% and interest is compounded
monthly. State the answer as a percent rounded to the nearest hundredth.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F61b8b1a9-1875-4393-9a2d-9f6c48b23e46%2F6a2c9b64-672d-43a8-b3cc-459bd5638f75%2Fsj4q0e.jpeg&w=3840&q=75)
Transcribed Image Text:6. When previously earned interest is added to an investment and then allowed to
earn more interest, we say that the interest is compounded. Compounding interest
increases the effective interest rate of an investment compared to simple interest,
where the interest earned is not added to the investment to earn additional interest.
The annual percentage yield, or APY, gives the effective interest rate on an investment
based on the number of times the interest is compounded in a year, n, and the interest
rate, r, as a decimal.
APY = | 1 +-)-1
Find the annual percentage yield if the interest rate is 4% and interest is compounded
monthly. State the answer as a percent rounded to the nearest hundredth.
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