1. P = Po*(1+r)^n
r = (8%/4)/100% = 0.02 = Quarterly %
rate expressed as a decimal.
n = 4Comp /yr * 1yr = 4 Compounding
periods.
P = 1,000,000(1.02)^4 = 1,082,432.16
Int. = P-Po
2. APY = (I/Po)*100% =
. Compute the amount of compound interest earned in 1 year for an investment of $1,000,000 with a nominal interest rate of 8% compounded quarterly.
Compute the Annual Percentage Yield (APY) for the investment in the previous question. (Round APY to the nearest hundredths of a percent.)
1 answer