Monica Lane maintains a savings deposit with Monarch Credit Union. This past year Monica received $10.75 in interest earnings from her savings account. Her savings deposit had the following average balance each month:

January $400 July $350

February 250 August 425

March 300 September 550

April 150 October 600

May 225 November 625

June 300 December 300

What was the annual percentage yield (APY) earned on Monica’s savings account?

Question

Monica Lane maintains a savings deposit with Monarch Credit Union. This past year Monica received $10.75 in interest earnings from her savings account. Her savings deposit had the following average balance each month:

January	$400	July	$350
February	250	August	425
March	300	September	550
April	150	October	600
May	225	November	625
June	300	December	300

What was the annual percentage yield (APY) earned on Monica’s savings account?

Accepted Answer

Monica’s account had an average balance this year of:

[$400 x 31 days + $250 x 28 days + $300 x 31 days + $150 x 30 days
+ $225 x 31 days + $300 x 30 days + $350 x 31 days + $425 x 31 days + [latex]\frac{\$ 550 imes 30 ext { days }+\$ 600 imes 31 ext { days }+\$ 625 imes 30 ext { days }+\$ 300 imes 31 ext { days }]}{365 ext { days }}[/latex]

= $373.56

Then the APY must be:

[latex]A P Y=100\left[\left(1+\frac{\$ 10.75}{\$ 373.56} ight)^{365 / 365}-1 ight]=2.88 ext { percent }[/latex]

Question 12.P.7: Monica Lane maintains a savings deposit with Monarch Credit ...

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