From the question;
we are given
Initial balance = $1,500.00 and a 2.50% interest
This implies that the
interest rate = 2.50%
We are to find the effective annual yield
The effective annual yield is calculated using
[tex]Y=(1+\frac{r}{n})^n-1[/tex]Where
r = interest rate
n = number of compounds per year
Therefore
r = 2.5%
n = 1
Hence
[tex]\begin{gathered} Y=(1+\frac{2.5}{1})^1-1 \\ Y=(3.5)^1-1 \\ Y=3.5-1 \\ Y=2.5 \end{gathered}[/tex]Therefore the effective annual yield is 2.5%
