HP 10bII+ Financial manual Jg§, AJPJ4, YVjG7gy

To solve a continuous compounding problem complete these steps:

1.Compute the annual effective rate using the above equation.

2.Either use this effective rate in your calculations with an annual period (P/YR = 1) or convert this rate so that it applies to your payment period. In the following example, P/YR = 12 so you have to calculate a new NOM% using the interest rate conversion application with P/YR equal to 12.

Example

You currently have 4,572.80 in an account at Dream World Investments that earns 18% annual interest compounded continuously. At the end of each month, you deposit 250.00 in the account. What will the balance be after 15 years?

Table 13-6 Calculating the annual nominal rate

KeysDisplay Description

Jg§	0.18	Divides nominal rate by 100.
\K	1.20	Raises e to 0.18 power.
AJPJ::4	19.72	Calculates annual effective rate.
\Ð	19.72	Stores effective rate.
JG\Í	12.00	Sets payments per year.
\Ó	18.14	Calculates the annual nominal
		rate for a monthly payment

period.

Set to End Mode. Press \¯if BEGIN annunciator is displayed.

Table 13-7 Calculating the balance amount after 15 years

KeysDisplay Description

JV\Ú	180.00	Stores number of months.
GV:yÌ	-250.00	Stores regular payment.
YVjG7gy		negative value (like an initial
	-4,572.80	Stores current balance as a
Ï		investment).
É	297,640.27	Calculates the account balance
		after 15 years of payments with

18% interest compounded continuously.

140 Additional Examples