Sharp EL 738C EL-738 Operation Manual - Page 52
Conversion between APR and EFF
UPC - 074000018549
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Conversion between APR and EFF Interest rates can be converted between APR (annual, or nominal percentage rate) and EFF (effective interest rate). • The APR is an investment's annual rate of interest when compounding happens only once a year. The interest rate printed on a bond is an example of an APR. • The EFF is an investment's annual rate of interest when compounding happens more often than once a year. It reflects the actual amount of return for a given nominal rate. For example, if your investment compounds monthly, then the stated nominal percentage rate becomes a monthly rate, and the EFF reflects your actual annual rate of return. Basic operations 1. Press s to clear the display. Make sure the calculator is in NORMAL mode. 2. Enter the calculation data in the following format: • To change APR to EFF: Number of compounding periods per year > Nominal percentage rate . P • To change EFF to APR: Number of compounding periods per year > Effective interest rate . ! Converting between APR and EFF Procedure Calculate the effective interest rate for twelve compounding periods with an 18% APR. Convert this rate back to the original APR. Key operation s 12 > 18 . P 12 > 19.56 . ! Display 12,18¬EFF 1956 12,19.56¬APR 1800 51