starrhunter
Herman opened a credit card at a department store with an APR of 24.45% compounded semiannually. What is the APY on this credit card?



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amistre64
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assume a balance of 100, what do you get for the balance at the end of the year when compounding?

amistre64
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semiannually means 2 times a year
the stated APR is for 1 year, so half it to the period rate

starrhunter
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i get 125.94

starrhunter
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but i still dont know how to find apy

amistre64
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125.94 is good; subtract the original 100

amistre64
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or look at it this way: APY is simple interest
100(APY) = 125.95

starrhunter
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25.94 is the apy?

amistre64
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yep

starrhunter
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awesome