Ok matt.....
I first answered this question for you here
http://www.jiskha.com/display.cgi?id=1452909381
Apparently you didn't like it, so you changed the rates to 5% and 7%
Damon answered the question for you after you changed it to 5% in the same way I did.
http://www.jiskha.com/display.cgi?id=1452962487
.. and again you didn't like it.
How does your text define APY
I thought it went Annual Percentage Yield, which to me means the equivalent annual rate of interest equal to whichever rate is given.
The fact that there are $7000 and we have 18 months has nothing to do with it
In both the US and Canada, (I am in Canada) it means the same thing
find the annual rate compounded annually which is equivalent to 7% compounded monthly
if that rate is j
1+j = (1 + .07/12)^12
1+j = 1.0058333...^12
1+y = 1.07229..
j = .07229..
so the rate is 7.229%
now take it or leave it
Assume an 18 month CD purchased for $7000 pays an APR of 7% compounded monthly. What is the APY?
APY = ___%
Round the answer to two decimal places
1 answer