Compound Interest Calculations; Specifying The Number Of Compounding Periods And The Periodic Interest Rate; Calculating The Number Of Payments Or Compounding Periods - HP 0012C-90001 User Manual

Compound Interest Calculations

Compound Interest Calculations Compound Interest Calculations Compound Interest Calculations
Specifying the Number of Compounding Periods and the Periodic Specifying the Number of Compounding Periods and the Periodic
Specifying the Number of Compounding Periods and the Periodic Specifying the Number of Compounding Periods and the Periodic
Interest Rate Interest Rate
Interest Rate Interest Rate
Interest rates are usually quoted at the
that is, the interest rate per year. However, in compound interest problems, the
interest rate entered into i must always be expressed in terms of the basic
compounding period, which may be years, months, days, or any other time unit.
For example, if a problem involves 6% annual interest compounded quarterly for 5
n
years, — the number of quarters — would be 5 × 4 = 20 and
rate per quarter — would be 6% ÷ 4 = 1.5%. If the interest were instead
compounded monthly,
If you use the calculator to multiply the number of years by the number of
compounding periods per year, pressing w then stores the result into n n n n . The same
is true for i i i i . Values of
page 47.
If interest is compounded monthly, you can use a shortcut provided on the
calculator to calculate and store
To calculate and store

gA.
To calculate and store

gC.
Note that these keys not only multiply or divide the displayed number by 12; they
also automatically store the result in the corresponding register, so you need not
press the w or ¼ key next. The A and C keys are used in Example 1 on
page 46.

Calculating the Number of Payments or Compounding Periods

Calculating the Number of Payments or Compounding Periods Calculating the Number of Payments or Compounding Periods Calculating the Number of Payments or Compounding Periods
1. Press fCLEARG to clear the financial registers.
2. Enter the periodic interest rate, using ¼ or C.
3. Enter at least two of the following values:
Present value, using $.

Payment amount, using P.

Future value, using M.

was entered, press g× or g to set the payment mode.
PMT
4. If a
5. Press w to calculate the number of payments or periods.
Section 3: Basic Fin Section 3:
Section 3: Section 3:
annual rate
n
would be 5 × 12 = 60 and
n i
and are calculated and stored like this in Example 2 on
n i
and :
n
, key the number of years into the display, then press
i
, key the annual rate into the display, then press
Basic Financial Functions ancial Functions
Basic Fin Basic Fin ancial Functions ancial Functions
nominal rate
(also called the
i
— the interest
i
would be 6% ÷ 12 = 0.5%.
Note: Note: Note: Note: Remember to observe
the cash flow sign convention.
39 39
39 39
):