Assume an 18-month CD purchased for $7000 pays an APR of 7% compounded monthly. What is the APY?

(Fill in the blank below and round your answer to 2 decimal places.)

APY = %

1 answer

P = Po(1+r)^n.

r = (7%/12)/100% = 0.005833 = Monthly % rate expressed as a decimal.

n = 12Comp/yr. * 1.5yrs. = 18 Compounding periods.

P = 7000(1.005833)^18 = $7737.90.

APY = ((P-Po)/Po)*100 =