where: X = Final amount D = Initial Deposit r = period rate n = number of compounding periods per year y = number of years
Stated Annual Interest Rate (r) which is the nominal rate of return the bank offers. Term / number of periods (t) you deposit your cash. ... Compounding frequency (n) is the rule that shows how often the interest gets capitalized and can be Daily (365 times/year), Monthly (12 times per year), Quarterly (4 times/year), Semi-annually (two ... More items...
APR vs. APY: The Big Difference is Compounding Years Invested APR (Simple Interest) APY (Annual Compounding) APY (Daily Compounding) End of Year 1 $10,500.00 $10,500.00 $10,512.67 End of Year 2 $11,000.00 $11,025.00 $11,051.63 End of Year 3 $11,500.00 $11,576.25 $11,618.22
While your account's interest rate is expressed as an annual percentage, APY goes a step further and takes the frequency of the compounding into account.
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