276 Appendix G: United Kingdom Calculations
Annual Percentage Rate (APR) Calculations
In the United Kingdom, the calculation of the Annual Percentage Rate of Charge
(APR) in accordance with the United Kingdom Consumer Credit Act (1974) differs
from the calculation of the APR in the United States. Unlike the practice in the
United States, where the APR can be calculated by multiplying the periodic interest
rate by the number of periods per year, in the United Kingdom the APR is
calculated by converting the periodic interest rate to the "effective annual rate,"
then rounding the result to one decimal place. With the periodic interest rate in the
display and in the i register and the payment mode set to End, the effective annual
rate can be calculated by pressing ÞP, then keying in the number of
compounding periods per year and pressing w0$M. Pressing f1 will
then display the rounded APR.
Solutions for the price and yield to maturity of United Kingdom bonds are not
included in this handbook. Actual practice differs according to the type of bond;
variations such as cumulative and ex-dividend pricing, simple or compound interest
discounting, etc., may be encountered.
Application Notes covering such situations may be available in the United
Kingdom; check with your local authorized Hewlett-Packard dealer.