pre calc question

Question

A savings account pays interest at a annual percentage rate (APR) of 2.9%, compounded weekly. Find the annual percentage yield (APY) for this account.

Give your answer as a percentage, rounded to three decimal places.

Answer: APY =



Answer 1

To find the APY, we need to take into account the effect of compounding.

The formula for APY is:

APY = (1 + r/n)^n - 1

where r is the annual percentage rate and n is the number of compounding periods per year.

In this case, r = 2.9% and n = 52 (since interest is compounded weekly). Substituting these values into the formula, we get:

APY = (1 + 0.029/52)^52 - 1 = 0.029456 (rounded to six decimal places)

Multiplying by 100 to express as a percentage, we get:

APY = 2.946% (rounded to three decimal places)



Therefore, the annual percentage yield for this savings account is 2.946%