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6: Interest Rate Conversions 89
File name : English-M02-1-040308(Print).doc Print data : 2004/3/9
effective interest rate based on your payment periods. Last, convert the
effective rate to the nominal rate based on the bank’s compounding
periods.
Example: Balance of a Savings Account. Starting today, you make
monthly deposits of $25 into an account paying 5% interest
compounded daily (365-day basis). At the end of 7 years, how much
will you receive from the account?
Keys: Display: Description:
Periodic interest-rate
conversion menu.
365 Stores bank’s
compounding periods.
5 Stores bank’s nominal
interest rate.
Calculates effective interest
rate for daily compounding.
12 Stores number of deposits
per year.
Calculates equivalent
nominal interest rate for
monthly compounding.
ee
<
Switches to TVM menu;
NOM% value is still in
calculator line.
s
Stores adjusted nominal
interest rate in I%YR.
12
e
Sets 12 payments per
year; Begin mode.