🔢How is APY calculated

Simple interest equation (principal + interest)

A = P(1 + rt)

where:

A = total accrued amount (principal + interest)

P = principal amount I = interest amount

r = annual interest rate (decimal); r = R/100

R = interest rate percentage per annum; R = r * 100

t = time period involving month or year

According to the basic formula, a = P (1 + rt) is derived from a = P + I, because I = Prt, and then a = P + I becomes a = P + Prt, which can be rewritten as a = P (1 + rt)

Note that rate R and time t should be in the same time unit, such as month or year. The time conversion based on 365 days / year has 30.4167 days / month and 91.2501 days / quarter. 360 days / year has 30 days / month and 90 days / quarter.

Simple Interest Formula and Calculation:

A = final investment value, using a simple interest formula: A = P (1 + rt), where p is the principal amount invested at the interest rate R% of each period in t time periods. Where R is decimal form; r=R/100; r and t are in the same time unit.

The accrued amount of an investment is the original principal P and accumulated simple interest, I = Prt, so we have:

A = P + I = P + (Prt), lastly A = P (1 + rt)

Calculate the total accrued amount (principal + interest) and solve A

A = P(1 + rt)

Calculate the principal and solve P

P = A / (1 + rt)

Calculate the interest rate in decimal system and solve r

r = (1/t)(A/P - 1)

interest rate is calculated as a percentage

R = r * 100

Calculation for T

.t = (1/r)(A/P - 1)

Example:

P = (principal + interest) = $1000

A = (total accrual) = $1,832,940