Convert a nominal rate to an effective rate
Find the real yearly rate when interest is added more than once a year.
A bank quotes 12% a year (the nominal rate) but adds interest every month. The balance really grows by more than 12%, because each month's interest earns interest. The effective rate is (1 + nominal ÷ m) to the power m, minus 1, where m is the number of times a year.
Classic Financial II
Start on the main screen: Press 2ND then CPT (QUIT) to leave a worksheet and return to the plain calculator. ON/OFF also drops back to the standard screen and clears an error.
Open the interest conversion worksheet (2nd, 6). Enter the nominal rate NOM of 12 and press enter.
2NDICONV612ENTERMove down twice to C/Y (compounding periods a year), type 12 and enter.
↓↓12ENTERGo back up to EFF and press CPT.
↑CPT
You should seeEFF= 12.68
RPN Financial 12
Start on the main screen: There is no menu to leave: the display always shows the X register. Press f then R/S (P/R) to leave program mode, and clear a pending prefix by pressing ON.
The monthly rate is 1%, so type 1.01 and ENTER.
1.01ENTERRaise it to the power 12 with yˣ, subtract 1, and multiply by 100 to get a percentage.
12yˣ1−100×
You should see12.68
Classic Graphing 84
Start on the main screen: Press 2nd then mode (QUIT) to get back to the home screen. Pressing clear on a menu also backs out of it.
Type (1 + 0.12 ÷ 12) to the power 12, minus 1. The answer is a decimal: 0.1268 means 12.68%.
(1+.12÷12)^12−1enter
You should see.1268250301