@lulu22 @rsadhvika

If the APR of a savings account is 7.8% and interest is compounded monthly, what is the approximate APY of the account?

A. 7%
B. 8.08%
C. 1.04%
D. 10.37%

Question

@lulu22 @rsadhvika 

If the APR of a savings account is 7.8% and interest is compounded monthly, what is the approximate APY of the account?

 		A.	7%
 		B.	8.08%
 		C.	1.04%
 		D.	10.37%

anonymous · Answer

I dont know this one sorry

anonymous · Answer

its ok

anonymous · Answer

thats what i thought to

ganeshie8 · Answer

$APY =     \large  (1+\frac{.078}{12})^{12} - 1$

anonymous · Answer

d

ganeshie8 · Answer

simplifying should give u 8.08 :)

anonymous · Answer

o ok i see

anonymous · Answer

o wow ok

anonymous · Answer

i did not really get how to did this one

ganeshie8 · Answer

its just a terminology thing... 
APY = wat happens to APR after compounding

ganeshie8 · Answer

suppose, if i give u 100, at interest rate of 7.8 %

ganeshie8 · Answer

you have to return me 107.8 after 1 year right ?

ganeshie8 · Answer

looks APY/APR is repelling ppl lol...  @Lulu212  disappeared :|

anonymous · Answer

ok i get what u saying

ganeshie8 · Answer

7.8 becomes 8.08 if we compound 12 times
so, u wil have to  return me 108.08 if after 1 year (with compounding)