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`APY = (1 + "r" / "n" )^ "n" - 1`

Enter a value for all fields

The **Annual Percentage Yield** calculator computes the annual yield percentage (APY) as defined by the common mathematical definition. The APY in this definition is the rate of interest that is earned when taking into consideration the effect of compounding. In Finance, it is also known as the effective annual rate. See also APY(FDIC).

**INSTRUCTIONS:** Enter the following:

**r**- the Annual interest rate (entered as a decimal fraction; i.e 0.037 for a 3.7 % interest rate)**n**- the number of times the interest is compounded per year

**Annual Percentage Yield** is calculated and returned as a percentage.

The annual yield percentage is a normalized representation of an interest rate, based on a compounding period of one year.

The APY can be used as a single-point comparison of different interest rate and period offerings for investment and savings accounts. APY generally refers to the rate paid to a depositor by a financial institution. The annual percentage rate (APR) is the analogous rate paid to a financial institution by a borrower. The APY is quoted as the return at the end of an investment term and thus is a higher return than its APR counterpart, whose rate is applied at the beginning of the compounding interval. by using the formula managers in different institution can be able to calculate and make better decision in giving out loans etc.

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