anonymous
  • anonymous
PLEASE PLEASE PLEASE HELP ME?! Part 1: Explain which companies would advertise APR over APY and describe how this would help them attract customers. (4 points) Part 2: Create a unique APR (state how often the rate is compounded) and calculate the corresponding APY. Use a comparison of the two rates to verify your answer to part 1. (4 points) (8 points)
Mathematics
  • Stacey Warren - Expert brainly.com
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SOLVED
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schrodinger
  • schrodinger
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anonymous
  • anonymous
@satellite73
anonymous
  • anonymous
because the apy is larger than the apr
anonymous
  • anonymous
lets do an example pick an interest rate as a precent

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anonymous
  • anonymous
you want me to pick one?
anonymous
  • anonymous
yes please
anonymous
  • anonymous
ok i pick 6%
anonymous
  • anonymous
i mean APR is 6%, i.e. the "annual percentage rate" is 6% if the interest is compounded only once a year, then you get an additions 6% of your deposit. say you deposit $100 then you get $6 for a total of $106 but the APY is different
anonymous
  • anonymous
if the annual percentage rate is 6% but it is compounded more frequently, then you get more money so for example lets compound it monthly and invest the same $100 then in one year you would have \[100(1+\frac{.06}{12})^{12}=100(1.005)^{12}=106.17\]
anonymous
  • anonymous
not much different, but a little larger so if the APR is 6% then the APY is 6.17%
anonymous
  • anonymous
without using the $100 you can calculate the APY that example by computing \[(1+\frac{.06}{12})^{12}-1\] and getting \(.0617\) which is \(6.17\%\)
anonymous
  • anonymous
how would they attract customers though?
anonymous
  • anonymous
because \(6.17\%\) is larger than \(6\%\)

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