Herman opened a credit card at a department store with an APR of 24.45% compounded semiannually. What is the APY on this credit card?
PLEASE HELP!!!!

Question

Herman opened a credit card at a department store with an APR of 24.45% compounded semiannually. What is the APY on this credit card?
 PLEASE HELP!!!!

amistre64 · Answer

$$(1+\frac{apr}{n})^n=1+apy$$

amistre64 · Answer

in this case, semiannually means n=2

anonymous · Answer

can you explain it a little?

amistre64 · Answer

APY is simple interest
APR is compounded

when does the APY equal the compunding of the APR?

amistre64 · Answer

the setup i presented is the mathical equivalent of that statement ... solve for APY

anonymous · Answer

i dont know that is what im stuck on

anonymous · Answer

i dont get how to solve for APY?

amistre64 · Answer

the setup is
$$(1+\frac{apr}{n})^n=1+apy$$

given that the apr is compounded semiannually (n=2), adn the apr = 24.45%
$$(1+\frac{.2445}{2})^2=1+apy$$
the rest is basic algebra .... subtract 1

anonymous · Answer

okay when you multiply the second 2 is it for everything in the parentesis?

amistre64 · Answer

the exponent is applied to the paranthesis, yes

anonymous · Answer

|dw:1369782032328:dw| i dont get what to do after that?