Question

Helio's account has an annual interest rate of 3.3% compounded daily.What is the annual percentage yield for Helio's account?

Answer 1

Let the initial amount be $1 and use the rule of the compounded interest

$A=P(1+\frac{r}{n})^{nt}$

P = 1

r = 3.3% = 3.3/100 = 0.03

n = 365

t = 1

$\begin{gathered} A=1(1+\frac{0.033}{365})^{365\times1} \\ A=1.033548998 \end{gathered}$

Now find the annual rate using the percent of the increasing rule

$P=\frac{N-O}{N}\times100$

N is the new amount

O is the old amount

$\begin{gathered} \text{Perc}\mathrm{}=\frac{1.033548998-1}{1}\times100 \\ \text{Perc}\mathrm{}=3.355 \end{gathered}$

The annual percent is 3.355%