Question

An account that compounds interest yearly has an annual percentage yield of 7.1%.What is the annual interest rate for the account?

Answer 1

$\begin{gathered} \text{Annual rate (i) = (1+}\frac{r}{n})^n-1 \\ i\text{ = (1+}\frac{0.071}{1})^1-1 \\ \text{ i= (1+0.071) -1} \\ i=\text{ 0.071} \\ I=i\times100 \\ I=\text{ 7.1\%} \end{gathered}$