## Thinking Mathematically (6th Edition)

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 $Y = (1+\frac{r}{n})^{n}-1$ $Y = (1+\frac{0.0375}{360})^{360}-1$ $Y = 0.0382$ The effective annual yield is 3.82%