How to figure the annual compound interest on 5.01% daily.?

2 ⤊

How to figure the annual compound interest on 5.01% daily.?

I have a tax free account in a 457K IRS plan at work. One of the investments pays 5.01% compounded every day! How do I figure the annual interest rate? Say I have $100,000.00 in the acct. Compound, on top of compound for one year...is what yield percent?

2007-10-29 00:49:56 · 2 answers · asked by Brian A 1 in Business & Finance ➔ Investing

2 answers

Okay, you have a 457 plan that provides 5.01% per year, but it is compounded daily. Then you have (1+.0501/365)^365 as your return or 1.05013726.

Daily compounding doesn't add a lot, it just sounds good.

2007-10-29 01:15:57 · answer #1 · answered by OPM 7 · 2⤊ 0⤋

Annual interest rate is (1 + .0501/365)^365 = 1.051373, or 5.1%

2007-10-29 00:53:33 · answer #2 · answered by Anonymous · 0⤊ 0⤋