Stacks APY Interest Calculator for Lending

How APY Interest Calculator Works

The calculation of interest earned in a year when taking compounding into it’s account. Many financial services like loans set the different interest rates. APY gives you an idea on how much interest will be accrued in a year when we take compounding into account. It can be a simple formula yet powerful formula in choosing financial offers.

For example, you have the following offers:

1. Interest rate of 1% compounded yearly, APY = 1%
2. Interest rate of 0,7% compounded quarterly, APY = 0,702%
3. Interest rate of 0,5% compounded daily, APY = 0,501%

You can conclude by seeing APY. Higher APY will accrue higher interest.

APY Formula

APY is calculated using the below formula where r is the annual interest rate and n is the number of compounding periods each year. People sometimes confuses APY with APR. APR refers to annual interest rate without taking compounding into it’s account.

Where:
APY = Annual Percentage Yield (APY)
r = Annual Percentage Rate (APR) as a decimal, e.g. 0.05 for 5%
n = Number of periods in a year