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APR (annual percentage rate) and APY (annual percentage yield) differ because APY accounts for compounding. APY is always higher and shows the true return on savings or cost of credit.
ସୂତ୍ର
APY = (1 + APR/n)ⁿ - 1, where n is compounding frequency per year
ଷ୍ଟେପ୍-ଷ୍ଟେପ୍ ଗାଇଡ୍ |
- 1Enter APR as a decimal
- 2Select compounding frequency (daily, monthly, quarterly, annual)
- 3Calculate APY using the formula
ସମାଧାନ ହୋଇଥିବା ଉଦାହରଣ
ଇନପୁଟ୍
APR = 5%, daily compounding
ଫଳ
APY ≈ 5.127%
(1 + 0.05/365)³⁶⁵ - 1
ଏଡ଼ାଇବା ଯୋଗ୍ୟ ସାଧାରଣ ଭୁଲ
- ✕Treating APR and APY as equivalent
- ✕Wrong compounding frequency
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