HP 113394 User Guide - Page 213

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. RPN Mode: 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. Press ÞPM to obtain the effective annual interest rate. ALG Mode: 2. Key in the annual nominal rate as a percentage. 3. Press z. Key in the number of compounding periods per year, then press ¼ÞP. Then key in the number of compounding periods per year and press n. 4. Press M to obtain the effective annual interest rate. Example 1: What is the effective annual interest rate if the annual nominal rate of 5.25% is compounded quarterly? Keystrokes (RPN mode) f] g fCLEARG 5.25\ 4nz¼ Keystrokes (ALG mode) f[ g fCLEARG 5.25z 4¼ Display 5.25 1.31 ÞPM ÞP4nM 5.35 Nominal rate. Percent quarterly interest rate. Percent effective interest rate. 213 File name: hp 12c pt_user's guide_English_HDPMF123E27 Page: 213 of 275 Printed Date: 2005/8/1 Dimension: 14.8 cm x 21 cm