How to Calculate Annual Percent Rate Yield
The annual percentage yield, or APY, measures the effective interest rate per year. The APY increases each time that accrued interest gets added to the account, also know as interest compounding. To figure the APY from the annual interest rate percentage, you need to know how many times each year interest compounds.
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Instructions
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Divide the annual interest rate by 100. For example, for an annual interest rate of 4.44 percent, divide 4.44 by 100 to get 0.0444.
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Divide the result by the times per year interest compounds. In this example, if interest compounds quarterly, divide 0.0444 by 4 to get 0.0111.
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Add 1 to the periodic rate. In this example, add 1 to 0.0111 to get 1.0111.
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4
Raise the result to the number of times per year interest compounds. In this example, raise 1.0111 to the fourth power to get 1.045144746.
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Take away 1 from the result to find the APY as a decimal. In this example, take away 1 from 1.045144746 to find the APY equals 0.045144746.
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Multiply the APY as a decimal by 100 to find the APY as a percent. In this example, multiply 0.045144746 by 100 to find the APY equals 4.51 percent.
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