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Marit Brunsell deposited $80,000 at Bank of America at 12% interest compounded quarterly. What is the effective rate (APY)? (Do not round intermediate calculations. Round your answer to the nearest hundredth percent.)

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amanarsalan

Answer:

12.55%

Explanation:

APY = [tex](1 + \frac{r}{n} )^{n}[/tex] - 1

Where;

r = 12% = 0.12

n = 4, As the rate is compounded quarterly so n will be 4 per year.

APY = [tex](1 + \frac{0.12}{4} )^{4} -1[/tex]

APY = [tex](1 + 0.03)^{4} -1[/tex]

APY = [tex](1.03)^{4} -1[/tex]

APY = 1.12550881 - 1

APY = 0.12550881

or

APY = 12.55%

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