document.write( "Question 1201178: Find the annual percentage yield for an investment that earns 7% per year, compounded monthly. (Round your answer to two decimal places.) \n" ); document.write( "

Algebra.Com's Answer #835443 by Theo(13342) $\"\"$ $\"About$

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7% per year, compounded monthly, = 7/12 = .583333.....% per month.
\n" ); document.write( "growth factor = that divided by 100 + 1 = 1.0058333333... per month.
\n" ); document.write( "that's the same as (1 + .07/12) growth factor per month.
\n" ); document.write( "to find the effective annual growth factor, raise that to the 125h power.
\n" ); document.write( "the effective interest rate per year is that minus 1.
\n" ); document.write( "multiply that by 100 to get the percent.
\n" ); document.write( "you will get:
\n" ); document.write( "(1 + .07/12) ^ 12 = 1.072290081.
\n" ); document.write( "that's the effective growth factor per year.
\n" ); document.write( "subtract 1 from that to get .072290081.
\n" ); document.write( "that's the effective growth rate per year.
\n" ); document.write( "multiply that by 100 to get 7.2290081%.
\n" ); document.write( "that's the effective percent growth rate per year.
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