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26 June, 08:27

Ralph Kramer invested $11,000 in a certificate of deposit for 1 year. The certificate earns interest at an annual rate of 6.75%

compounded daily. The amount per $1.00 is 1.069824. What is the annual percentage yield?

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  1. 26 June, 09:39
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    7 %

    Explanation:

    The annual percentage yield will be the percentage gain at the end of the year.

    The initial investment is $11, 000; the yield will be the balance at the end of the year minus the initial investment.

    i. e., yield = balance at the end of the year - Initial investment

    Percentage yield = Yield / initial investments x 100

    balance at the end of the year will:

    the applicable formula for the future is the compound interest formula.

    FV = PV * (1+r) n

    Where

    FV = future value

    PV = $11,000

    r = 6,75 per year 0r 0.000185 per day

    n - i year or 365 days

    Balance at the end of the year

    FV = 11, 000 X (1+0,000185) 365

    FV = 11,000 X 1.069834

    FV = 11, 768.35

    the yield will be

    =balance at the end of the year - initial investment

    =$11,768.35 - $11,000

    =$768.35

    Percentage yield will be

    yield / initial investment x 100

    =768.35 / 11,000 x 100

    =6.985%

    =7%
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