In order to calculate the APY, let's use the value of r = 0.03 (interest rate) and the value of n = 12 (since the interest is compounded monthly, that is, 12 times a year), so we have:
[tex]\begin{gathered} \text{APY}=(1+\frac{0.03}{12})^{12}-1 \\ \text{APY}=(1.0025)^{12}-1 \\ \text{APY}=1.0304-1 \\ \text{APY}=0.0304=3.04\text{\%} \end{gathered}[/tex]
