19-6 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.
k k k k k Converting the Annual Percentage Rate (APR) to the
In the set up screen, specify "Fix2" for Display and then press J.
P.6
Perform the following key operations from the input screen.
k k k k k Converting the Effective Interest Rate (EFF) to the Annual
n ......................
number of compoundings
I
% ................... interest rate
• {' ' ' ' ' EFF}/{' ' ' ' ' APR} ... {annual percentage rate to effective interest rate}/{effective
interest rate to annual percentage rate} conversion
Effective Interest Rate (EFF)
APR/100
EFF =
1+
Example
Calculate (to two decimal places) the effective interest rate for
an account paying an interest rate of 12%, compounded
quarterly.
ew(
n
= 4)
bcw(
I
% = 12%)
1('
EFF
)
• The obtained value is assigned to
Percentage Rate (APR)
EFF
APR =
1+
100
n
–1
100
n
I
%.
1
n
–1
n 100
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