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Comparing the Nominal Interest Rate of Investments
Comparing the nominal interest rate (annual percentage rate) of
investments is misleading when the investments have the same nominal
rate but different numbers of compounding periods per year.
To make a more valid comparison, convert the nominal interest rate
(
) to the annual effective interest rate (
NOM
•
The nominal interest rate (
compounding period multiplied by the number of compounding
periods per year.
•
The annual effective interest rate (
interest rate that you actually earn for the period of time stated.
Resetting Variables
•
To reset all calculator variables and formats to default values,
including the Interest Conversion worksheet variables, press &
} !.
Variable
NOM
EFF
C/Y
•
To clear the
affecting
C/Y
worksheet.
Converting Variables
You can convert a nominal rate to an annual effective rate or vice versa.
Entering Values for Nom and EFF
Enter a value for
Converting Interest Rates
To access the Interest Conversion worksheet, press & v. The
1.
current
NOM
To clear the worksheet, press & z.
2.
3.
Enter a value for the known interest rate (either
To enter a value for a known variable, press # or " until
4.
is displayed, key in a value, and press !.
EFF
Press # to display
5.
Other Worksheets
NOM
and
variables and reset default values without
NOM
EFF
, press & z in the Interest Conversion
or
as an annual rate.
NOM
EFF
value appears.
. If necessary, change the value and press !.
C/Y
) for each investment.
EFF
) is the interest rate per
) is the compound annual
EFF
Default
0
0
1
or
).
NOM
EFF
or
NOM
75
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