Finance Calculator
HP 12Cdivider061.gif (1362 bytes)

Interest Rate Conversion

The interest conversion function can be used when either the nominal interest rate is given, and the annual effective interest rate is needed, or when the annual effective rate is given and the nominal rate is needed.

a. A certificate offers a nominal interest rate of 5% with quarterly compounding. What is the annual effective interest rate?

To begin with press g (the blue key), END (right hand side above #8 key) and f clear FIN (third row fourth column)

1. Enter Nominal rate: 5, ENTER
2. Enter quarterly compounding: 4, then press n hp12c.gif (288 bytes) i
3. Key in 100 then press CHS, ENTER, PV
4. Press FV + and the EFF is 5.09%

This process can be reversed, for example, to find the Nominal rate when the Effective rate is given.

b. A certificate offers an annual effective interest rate of 6% with quarterly compounding. What is the nominal interest rate?

To begin with press g (the blue key), END (right hand side above #8 key) and f clear FIN (third row fourth column)

1. Enter quarterly compounding: 4, then press n
2. Key in 100 then press ENTER PV.
3. Effective interest rate: 6, then press +, CHS, FV, i.
4. Press RCL, n, HP12cA.gif (292 bytes), to find Norminal rate is 5.87%

divider061.gif (1362 bytes)
Calculator Homepage | HP12C Homepage | HP12C Basics | HP12C Single Payment | HP12C Annuity
HP12C Growing Annuity | HP10C Loan Amortization | HP12C Interest Rate Conversion | HP12C NPV and IRR
HP12C Data Entry | HP12C Statistics | HP12C Regression

Last Updated on 1 May 2002, e-mail any comments to: robert.balik@wmich.edu