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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.
Formel
APY = (1 + APR/n)ⁿ - 1, where n is compounding frequency per year
Steg-för-steg-guide
- 1Enter APR as a decimal
- 2Select compounding frequency (daily, monthly, quarterly, annual)
- 3Calculate APY using the formula
Lösta exempel
Ingång
APR = 5%, daily compounding
Resultat
APY ≈ 5.127%
(1 + 0.05/365)³⁶⁵ - 1
Vanliga misstag att undvika
- ✕Treating APR and APY as equivalent
- ✕Wrong compounding frequency
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