ANNUAL PERCENTAGE YIELD APY Lesson 12.2

Vocabulary Annual Percentage Yield (APY)- Also called effective annual yield is the rate of return on your investment for a one-year period. The higher the APY, the better the investment. CD’s Savings account Bonds Stocks

Formulas

Find the APY to the nearest thousandth of a percent on $6,000 for one year at 3.50% compounded quarterly

Casey invests $10,000 in a 4-year CD at 4% compounded monthly. a) What is the amount after 4 years? b) What is the interest earned? c) What is the amount after 1 year? d) What is the interest earned? e) What is the APY to the nearest thousandth of a percent?

Casey invests $10,000 in a 4-year CD at 4% compounded monthly. a) What is the amount after 4 years? Amount = Original Principal X Amount of $1.00 Amount = (10,000)( ) Amount = $11,731.99

Casey invests $10,000 in a 4-year CD at 4% compounded monthly. b) What is the interest earned? (after 4 years) Interest = 11, – 10,000 Interest = $

Casey invests $10,000 in a 4-year CD at 4% compounded monthly. c) What is the amount after 1 year? Amount = Original Principal X Amount of $1.00 Amount = (10,000)( ) Amount = $10,407.42

Casey invests $10,000 in a 4-year CD at 4% compounded monthly. d) What is the interest earned? (after 1 year) Interest = 10,407.42– 10,000 Interest = $407.42

Casey invests $10,000 in a 4-year CD at 4% compounded monthly.

Any questions?