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I'm having trouble figuring out the formula for calculating APY given a starting balance, ending balance, and term in length of years. What's the formula to do this?

Nathan Arthur
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2 Answers2

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The formula for APY is essentially solving the future value (or present value) formula for the rate:

    end_bal = start_bal * (1+APY)^N
==> (1+APY)^N = (end_bal/start_bal)
==> 1+APY = (end_bal/start_bal)^(1/N)
==> APY = (end_bal/start_bal)^(1/N) - 1
D Stanley
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I decided to go with the solution a friend gave me, since it gives me continuous compounding:

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Nathan Arthur
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