Annual Percentage Yield for investment that earns 8% per year, compounded monthly.

[Illvoices]

Annual Percentage Yield Find the annual percentage yield for an investment that earns 8% per year, compounded monthly.

so to start with i used the compound interest formula to solve this problem

A=P(1+0.08/365)³⁶⁵= 8.30%

although i got 2.46000 for an answer and i couldn't turn my answer in to a percent. could someone tell me were i went wrong.

 

[HallsofIvy]

You say this is compounded monthly but your formula divides into 365 "compounding intervals", compounding daily.

Try, instead, \(\displaystyle P(1+ \frac{.08}{12})^{12}\)