Problema Solution
What is the annual percentage yield of a $10,000 investment for 1 year at 12% interest compounded monthly?
Answer provided by our tutors
Let the principle (P) amount be: $10000 and interest rate (r) be 12%
Use the compounded monthly formula:
P (1 + r/12)^12
=10000 (1+12%/12) ^12
=10000 (12/12 + 0.12/12) ^12
= 10000 (12.12/12)^12
=11268 (correct to nearest dollar)