Explanation:
The right formula is:
APY earned = $100 \left[ 1 + \left( \frac{\text{Interest earned}}{\text{Average account balance}} \right)^{\frac{365}{\text{Days in period}}} - 1 \right]$
Average account balance = \frac{(\`5,000 \times 100 \text{ days}) + (\200` \times 265 \text{ days})}{365 \text{ days}} = \`1`,515$
APY = $100 \left[ \left(1 + \frac{`20.00`}{\`1`,515}\right)^{\frac{365}{365}} - 1 \right] = 1.32%$
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Q.4087 Use the APY formula needed by the Truth in Savings Act for the following calculation. Sundeep Raichura is a customer at Bright Bank. Raichura holds a savings deposit in the bank for a year. The balance in the account stood at $5,000 for 100 days and $200 for the remaining days of the year. Assume that Bright Bank paid Raichura $20.00 in interest earnings for the year, what APY did Raichura receive?
A
0.01
B
0.0132
C
0.0154
D
0.0199
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