Example: Monthly Payments, Daily Compounding
Starting today, you make monthly deposits of 25 to an account paying 5% interest, compounded daily (using a 365 day year). What will the balance be in seven years?
Step 1
Calculate the equivalent rate with monthly compounding.
Table
KeysDisplay Description
| V\Ó | 5.00 | Stores nominal percentage rate. |
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| DSV\Í | 365.00 | Stores bank’s compounding |
| periods per year. | |
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\Ð | 5.13 | Calculates annual effective rate. |
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JG\Í | 12.00 | Stores monthly periods. |
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\Ó | 5.01 | Calculates the equivalent |
| nominal percentage rate for |
monthly compounding.
Since NOM% and I/YR share the same memory, this value is ready for use in the rest of the problem.
Step 2
Calculate the future value.
Set to Begin mode. Press \¯if BEGIN annunciator is not displayed.
Table | Calculating the future value |
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Keys |
| Display | Description |
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:Ï |
| 0.00 | Stores present value |
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| GVyÌ | Stores payment | ||
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| j\Ú | 84.00 | Stores total number of payments | |
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É |
| 2,519.61 | Calculates the balance after 7 |
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| years. | |
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Time Value of Money Calculations 81