# Average Annual Yield

Submitted by Abe F. in Finance
June 16, 2016
A method to calculate interest that incorrectly combines simple interest and compound interest concepts on investments of more than one year. For example, suppose you invested $10,000 in a five-year CD offering 9.5 percent interest compounded quarterly, you would have $15,991.10 in the account at the end of five years. Dividing your $5,991.10 total return by five, the average annual return will be 11.98 percent.