Question

What is your annual percentage yield if you get a rate of 8% compounded weekly?

Answer 1

Annual percentage yield is `8.322%`.

Explanation:

In one year an amount `P` grows to `P(1+r/(nxx100))^n`, if compounded at `n` equal intervals in the year.

Hence as rate of `8%` is compounded every week i.e. at `52` equal intervals, the amount of `$100` becomes

`100xx(1+8/5200)^52`

= `100xx(1.0015385)^52`

= `100xx1.08322`

= `108.322`

Hence annual percentage yield is `8.322%`.