Operation Manual

156
Section 15
Savings
Nominal Rate Converted to Effective Rate
Given a nominal interest rate and the number of compounding periods per year,
this keystroke procedure computes the effective annual interest rate.
1. Press g and fCLEARG.
2. Key in the annual nominal rate as a percentage, then press \.
3. Key in the number of compounding periods per year, then press nz¼.
4. Key in 100 then press Þ\$.
5. Press M+ to obtain the effective annual interest rate.
Example 1: What is the effective annual interest rate if the annual nominal rate
of 5¼% is compounded quarterly?
For repeated calculations, the following HP 12C Platinum program can be used:
Keystrokes (RPN mode) Display
gÂ
fCLEARG
5.25\
5.25
Nominal rate.
4nz¼
1.31
Percent quarterly interest rate.
100Þ\
$M+
5.35
Percent effective interest rate.
KEYSTROKES
(RPN mode)
DISPLAY
KEYSTROKES
(RPN mode)
DISPLAY
fs 0
007, 0
f] 0
008, 0
fCLEAR
Î
000,
Þ
009, 16
gÂ
001, 43 8
\
010, 36
fCLEAR
G
002, 42 34
$
011, 13
n
003, 11
M
012, 15
z
004, 10
+
013, 40