Dividend rate and APY?

Question

I need help before I open a CD up the Dividend Rate is 4.43% and the APY is 4.50% with a minimum deposit of $500 for 6 monhts how do I add these number together so I can determind what I might get in return at the end of the 6 months.

Answer 1

The formula is the following:

A=P(1 + i)^n


A= future maturity value
P= Principal or present value
i= interst rate per period i=r/m
r= annual interest rate
m= number of compounding periods
n= total number of compounding periods

Answer 2

If the dividend rate is 4.43%, that means you are getting 0.359% interest per month (i.e. 4.43% / 12).

So, your total return would be:

$500 * ( ( 1 + 0.0443 / 12 ) ^ 6 ) = $511.1777

In other words, you would earn $11.18 on your $500.

The reason they stated 4.5% APY is that it is your Annual Percentage Yield when you compound the 0.359% per month. That is:

( ( 1 + 0.0443 / 12 ) ^ 12 ) = 1.0452 or 4.5%

Answer 3

.045/2 times the amount deposited. This may be slightly different if the institution pays on a daily basis rather than monthly, likely.