## Thinking Mathematically (6th Edition)

Published by Pearson

# Chapter 8 - Personal Finance - 8.4 Compound Interest - Exercise Set 8.4 - Page 521: 26

#### Answer

The effective annual yield is 6.2%

#### Work Step by Step

This is the formula we use when we find the effective annual yield $Y$: $Y = (1+\frac{r}{n})^{n}-1$ $Y$ is the effective annual yield $r$ is the stated interest rate $n$ is the number of times per year the interest is compounded $Y = (1+\frac{r}{n})^{n}-1$ $Y = (1+\frac{0.06}{360})^{360}-1$ $Y = 0.0618$ The effective annual yield is 6.2%

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