A customer makes a savings deposit for 60 days.During that time he earns $11 in interest and maintains an average daily balance of $1,500.What is the annual percentage yield on this savings account?
A)0.73%
B)4.32%
C)4.54%
D)4.78%
E)None of the options is correct

Question

Quizplus · Accepted Answer

To calculate the annual percentage yield (APY), we need to use the following formula:

APY = (1 + (interest ÷ principal))^365/t - 1

Where:
- Interest = $11
- Principal = Average daily balance for 60 days = $1,500
- t = Time in years = 60/365 = 0.1644 years

Substituting these values in the formula, we get:

APY = (1 + (11 ÷ 1,500))^365/0.1644 - 1
APY = 4.54%

Therefore, the correct answer is C) 4.54%.

A Customer Makes a Savings Deposit for 60 Days