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APY CALCULATOR

APY Calculator

APY Calculator

Calculate your potential earnings with compound interest

Calculate Your Earnings

Total Investment Value
$16,470.09
Interest Earned
$6,470.09
Annual Percentage Yield (APY)
5.12%

Understanding APY

APY (Annual Percentage Yield) represents the real rate of return on your investment, taking into account the effect of compounding interest.

APY = (1 + r/n)n – 1

Where:

  • r = Annual interest rate (as a decimal)
  • n = Number of compounding periods per year

Example: $10,000 invested at 5% annual interest compounded monthly:

APY = (1 + 0.05/12)12 – 1 = 0.05116 or 5.116%

After 10 years: $16,470.09

How Compounding Works

Compound interest is the addition of interest to the principal sum of a loan or deposit, where the interest that has been added also earns interest.

Key factors affecting your returns:

  • Initial investment: The amount you start with
  • Interest rate: The annual return percentage
  • Compounding frequency: How often interest is calculated and added
  • Time: The length of your investment

Why APY matters: It allows you to compare different investment options with different compounding frequencies on an equal basis.

This calculator helps you visualize how these factors combine to grow your money over time.

APY Calculator © 2023 | Understanding compound interest for better financial decisions

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