To determine which APR and compounding period offer the best APY (Annual Percentage Yield) on a savings account, let's evaluate each option and identify the one with the highest APY.
1. Option A: 2.501% APR, compounded daily
- Daily compounding means the interest is applied 365 times per year.
2. Option B: 2.502% APR, compounded monthly
- Monthly compounding means the interest is applied 12 times per year.
3. Option C: 2.504% APR, compounded semiannually
- Semiannual compounding means the interest is applied 2 times per year.
4. Option D: 2.503% APR, compounded quarterly
- Quarterly compounding means the interest is applied 4 times per year.
After evaluating the Annual Percentage Yield (APY) for each option, we find the following values:
- Option A (2.501%, daily): Approx. 2.5324%
- Option B (2.502%, monthly): Approx. 2.5309%
- Option C (2.504%, semiannually): Approx. 2.5197%
- Option D (2.503%, quarterly): Approx. 2.5266%
Among these calculated APYs, the highest value is approximately 2.5324%, which corresponds to Option A: 2.501% APR, compounded daily.
Therefore, the best choice, offering the highest APY, is:
Option A: 2.501%, compounded daily.
