How to Calculate Amount Earned Based on Annual Percentage Yield
The annual percentage yield measures how much interest you earn during a year after you account for the effects of interest compounding. The annual interest rate simply tells you the interest rate per year without the effects of interest compounding. If your interest compounds annually, it makes no difference. However, since most accounts compound interest more often than once per year, using the APY gives you a better estimate of the amount of interest earned.
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Instructions
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Divide the APY by 100 to convert the APY to a decimal. For example, if the APY equals 1.67 percent, divide 1.67 by 100 to get 0.0167.
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Multiply the result by the number of years interest accumulates. For example, if the interest accumulates for two years, multiply 2 by 0.0167 to get 0.0334.
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Multiply the result by the amount of money in the account. Continuing the example, if you started with $10,000 in the account, then you multiply $10,000 by 0.0334, which equals $334, which is the amount earned.
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