- 1). Divide the interest rate by the number of times the interest is compounded. For example, for an investment with a 6 percent interest rate that compounds each month, divide 6 percent by 12 months. That equals 0.005.
- 2). Add 1 to the interest per month. In the example, one plus 0.005 equals 1.005.
- 3). Raise the number calculated in Step 2 to the power of the amount of times the investment compounds. In the example. 1.005 raised to the power of 12 equals 1.061678.
- 4). Subtract one from the number calculated in Step 3. In the example, 1.061678 minus 1 equals an annual percentage yield of 0.061678, or 6.1678 percent.
- 5). Add 1 to the annual percentage yield and then raise the number to the amount of years in the investment. For example, if the investor wants to keep his investment with 6.1678 percent annual percentage yield for five years, then he raises 1.061678 to the power of five, which equals 1.34885.
- 6). Multiply the amount calculated in Step 5 by the investment amount to determine the investment's value. In the example, if the investor invested $3,000, then $3,000 times 1.34885 equals a total investment value of $4,046.55.
- 7). Subtract the investment's principal from the investment's value to determine total earnings. In the example, total earnings equals $1,046.55 (calculated from $4,046.55 minus $3,000).
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