The APR of Vinny's savings account is 3.5%, but interest is compounded only once a year. What is the APY of Vinny's savings acco

Question

makvit

1 month ago

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The APR of Vinny's savings account is 3.5%, but interest is compounded only once a year. What is the APY of Vinny's savings acco

unt?

Mathematics

2 answers:

tester [12.3K] · Answer 1 · 2026-03-30T21:19:21+03:00

We've established that Vinny's savings account has an APR of 3.5%, with interest compounded just once yearly. We need to determine the Annual Percentage Yield of the account.

To resolve this, we'll apply the APY formula to our issue.

$APY=(1+\frac{r}{n})^n-1$ , where,

r = annual percentage rate expressed as a decimal,[ [TAG_9]]

n = number of compounding periods in a year.

$3.5\%=\frac{3.5}{100}=0.035$

Given that the interest is compounded yearly, we have $n=1$ .

$APY=(1+\frac{0.035}{1})^1-1$

$APY=(1+0.035)-1$

$APY=(1.035)-1$

$APY=0.035$

When we change 0.035 to a percentage, we obtain $3.5%$ %.

Thus, the APY for Vinny's savings account is 3.5%.

tester [12.3K] · Answer 2 · 2026-03-30T21:19:01+03:00

tester [12.3K]1 month ago

4 0

Vinny's savings account has an Annual Percentage Yield of 3.5%, which matches the Annual Percentage Rate since the interest is compounded annually. By compounding interest once every year, it equates to the interest rate per annum.