Marit Brunsell deposited $80,000 at Bank of America at 12% interest compounded quarterly. What is the effective rate (APY)? (Do not round intermediate calculations. Round your answer to the nearest hundredth percent.)

Your answer is 12.55%

Explanation:

First you will need to find your interest for the year. Seeing that it is compounded quarterly at 12%, you will divide 12%/4 = 3% each quarter.

FV=$80,000(1+0.03)^4

Your future value for the end of the year comes to $90,040.7048 without rounding. Subtract your principal to find interest.

$90,040.7048 - $80,000 = $10,040.7048

You will now take your interest and divide by your principal.

$10,040.7048 / $80,000 = 12.55% when rounded.

Hope this helps!

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