Answer:
APY = 0.04 or 4%
Step-by-step explanation:
Given the annual percentage rate of 3.5% that is compounded quarterly, and a principal of $6,500:
We can use the following formula to solve for the annual percentage yield (APY):
[tex]APY = (1 + \frac{r}{n})^n - 1[/tex]
where r = interest rate = 3.5% or 0.035
n = number of compounding periods per year = 4
We can plug in the values into the equation:
[tex]APY = (1 + \frac{r}{n})^n - 1[/tex]
[tex]APY = (1 + \frac{.035}{4})^4 - 1[/tex]
[tex]APY = (1 + 0.00875)^4 - 1[/tex]
[tex]APY = (1.00875)^4 - 1[/tex]
APY = 1.03546 - 1
APY = 0.04 or 4%
