Financial Calculations Worksheet Page 25
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3019-6 Conversion between Percentage Interest
Rate and Effective Interest Rate
Press 5 (CNVT) in the Financial 1 screen to display the following input screen
for interest rate conversion.
n ......................
number of compoundings
I
% ................... interest rate
• {' ' ' ' ' EFF}/{' ' ' ' ' APR} ... {annual percentage rate to effective interest rate}/{effective
interest rate to annual percentage rate} conversion
k k k k k Converting the Annual Percentage Rate (APR) to the
Effective Interest Rate (EFF)
n
APR/100
–1 × 100
EFF =
1+
n
Example
Calculate (to two decimal places) the effective interest rate for
an account paying an interest rate of 12%, compounded
quarterly.
In the set up screen, specify “Fix2” for Display and then press J.
P.6
Perform the following key operations from the input screen.
ew(
n
= 4)
bcw(
I
% = 12%)
1('
EFF
)
I
• The obtained value is assigned to
%.
k k k k k Converting the Effective Interest Rate (EFF) to the Annual
Percentage Rate (APR)
1
n
EFF
–1 × n ×100
APR =
1+
100
345
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