Earl Miller deposited $25,000 at Y Bank at an interest rate of 12% compounded quarterly. (Use the tables in the handbook.)The effective rate (APY)is: (round to the nearest hundredth percent, if applicable)

Question

Quizplus · Accepted Answer

The effective annual rate (APY) for an interest rate compounded quarterly can be calculated using the formula $APY = (1 + \frac{r}{n})^n - 1$, where $r$ is the annual nominal interest rate (expressed as a decimal), and $n$ is the number of compounding periods per year. For a 12% annual interest rate compounded quarterly, $r = 0.12$ and $n = 4$, so $APY = (1 + \frac{0.12}{4})^4 - 1 = (1 + 0.03)^4 - 1 ≈ 0.1255$ or 12.55%.

Earl Miller Deposited $25,000 at Y Bank at an Interest