Interest Conversion Worksheet - Texas Instruments BA II PLUS User Manual

Interest Conversion Worksheet

Interest Conversion Worksheet Labels
Press & v to access the Interest Conversion worksheet.
Label
NOM
EFF
C/Y
Notes about the Interest Conversion Worksheet
♦ You may need to compare interest rates on investments that
have the same nominal interest rate (annual percentage rate)
but a different number of compounding periods per year. In
these situations, simply comparing the nominal rates is
misleading. Before you can make a valid comparison, you
should convert the nominal interest rate (
effective interest rate (
♦ The nominal interest rate (
compounding period multiplied by the number of
compounding periods per year.
♦ The annual effective interest rate (
annual interest rate that you actually earn for the period of
time stated.
♦ & z sets
.
C/Y
♦ & } ! sets
♦ You can convert a nominal rate to an annual effective rate, or
vice versa.
♦ Enter a value for
104
Meaning
Nominal rate
Annual effective rate
Compounding periods per year
EFF
and
NOM
NOM
or
NOM
Variable Type
Enter/compute
Enter/compute
Enter-only
NOM
) for each investment.
) is the interest rate per
NOM
) is the compound
EFF
to zero, but does not affect
EFF
and to zero, and
EFF
as an annual rate.
EFF
BA II PLUS™ Calculator
) to the annual
to 12.
C/Y