Loans And Mortgages - HP 10bII+ User Manual

Table 13-4 Calculating the cost without the cash discount
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Loans and Mortgages

Simple Annual Interest
Example
Your good friend needs a loan to start his latest enterprise and has asked you to lend him 450
for 60 days. You lend him the money at 10% simple annual interest, to be calculated on a
365-day basis. How much interest will he owe you in 60 days, and what is the total amount
owed?
This equation is used for calculating simple annual interest using a 365 day year:
INTEREST
=
Table 13-5 Calculating the total amount owed
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Continuous Compounding
The equation for calculating an effective rate for continuous compounding is:
LOAN AMOUNT INTEREST%
×
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -
EFF% e
(
=
Display Description
72,000.00 Calculates numerator in
equation.
98.00 Parentheses force order of
calculation.
36.73 Calculates, as an annual
percentage rate, cost of not
taking discount.
TERM OF LOAN IN DAYS
×
365
Display
0.10
7.40
457.40
NOM% 100
( ÷ )
1 ) 100
×
–
(
Description
Stores interest.
Calculates interest owed.
Calculates the total amount
owed.
Additional Examples 139
)