hi, i need some sample question with answers of apy and apr..please..i need to study..thank you very much..love you...god bless you
4 answers
You need to explain your abbreviations to get information. Please repost with more specific details. Thanks for asking.
APY(annual percentage yield)
Apr(annual percentage rate)
Apr(annual percentage rate)
APR = rate during period * number of periods in a year.
for example for a rate of 1% per month
.01*12 = .12 or 12% APR
HOWEVER
APY includes the compounding:
1.01^12 = 1.127 or 12.7 %
So a bank that wants to loan you money may say the APR is 12 even though they compound monthly and in fact the real effect (APY) is 12.7
Now if they compounded WEEKLY
.12/52 = .0023077
(1.0023077)^52 --->12.73 percent
daily would be worse yet
for example for a rate of 1% per month
.01*12 = .12 or 12% APR
HOWEVER
APY includes the compounding:
1.01^12 = 1.127 or 12.7 %
So a bank that wants to loan you money may say the APR is 12 even though they compound monthly and in fact the real effect (APY) is 12.7
Now if they compounded WEEKLY
.12/52 = .0023077
(1.0023077)^52 --->12.73 percent
daily would be worse yet
thank you Damon
1 answer