Compounding Periods Different From Payment Periods - HP 12c Platinum Reference Manual

46 Savings
12c platinum / 12C
RPN Keystrokes
fCLEARH
gÕ
1.192003\
5.25\
125t
2.242003\
60t
3.162003\
70t
4.062003\
50Þt
6.012003\
175t
7.062003\
100Þt
:3
Compounding Periods Different From
Payment Periods
In financial calculations involving a series of payments equally spaced in time with
periodic compounding, both periods of time are normally equal and coincident. This
assumption is preprogrammed into the HP 12C Platinum.
In savings plans however, money may become available for deposit or investment at a
frequency different from the compounding frequencies offered. The HP 12C Platinum can
easily be used in these calculations. However, because of the assumptions mentioned the
periodic interest rate must be adjusted to correspond to an equivalent rate for the payment
period.
Payments deposited for a partial compounding period will accrue simple interest for the
remainder of the compounding period. This is often the case, but may not be true for all
institutions.
These procedures present solutions for future value, payment amount, and number of
payments. In addition, it should be noted that only annuity due (payments at the beginning
of payment period) calculations are shown since this is the most common in savings plan
calculations.
12c platinum
ALG Keystrokes
fCLEARH
gÕ
1.192003³
5.25³
125t
2.242003³
60t
3.162003³
70t
4.062003³
50Þt
6.012003³
175t
7.062003³
100Þt
:3
Display
Initial Deposit.
125.00
Balance in account,
185.65
February 24, 2003.
Balance in account,
256.18
March 16, 2003.
Balance in account,
206.95
April 6, 2003.
Balance in account,
383.62
June 1, 2003.
Balance in account,
285.56
July 6, 2003.
Total interest.
5.56
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