With compound impacts, it gets trickier. For the first half of the year, Clark receives $1,000 x 6% = $60, which later gets reinvested, making the principal bigger at $1,060.
At the end of the year, Clark receives $1,060 x 6% = $63.6. Totally, Clark’s annual return is $60 + $63.6 = $123.6. This amount constitutes an APY = 12.36% to the principal $1,000.
An easier way to calculate APY is using the formula:
APY = (1 + R/N)^N - 1
Whereas R is the annual rate of return, N is the number of compounding periods.