Formula to calculate APY | |||||
APY | (1+(r/n))^n-1 | ||||
r is the interest rate and n is number of compounding | |||||
Calculation of APY for CD at bank one | |||||
APY | ((1+(4.8%/4))^4)-1 | ||||
APY | ((1+0.012)^4)-1 | ||||
APY | 4.887% | ||||
Calculation of APY for CD at first bank | |||||
APY | ((1+(4.79%/12))^12)-1 | ||||
APY | (1.003992^12)-1 | ||||
APY | 4.897% | ||||
Thus, First bank has higher APY | |||||
Bank One offered a 10-year certificate of deposit (CD) at 4.8% interest compounded quarterly. On the...
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