HP 20b Consultant Financial, 30b Professional manual 360 =, Using the Interest Conversion Menu

Using the Interest Conversion Menu

Find the effective rate of a 36.5% nominal rate compounded daily. See Table 3-6.See Figure 3 for help with navigating through the menu.

Table 3-6 Interest Rate Conversion Example

Keys	Display	Description
:&		Opens the IConv menu, starting with the current
		value of the nominal percentage rate

36.

5I

Inputs 36.5 as the nominal percentage rate.

>

360 I

>=

Scrolls to compounding periods per year, C/YR. Default value is 12.

Inputs 360 as the value for the number of compounding periods per year.

Scrolls to the variable for the effective rate and calculates it. A 36.5% nominal rate compounded daily equals an effective rate of 44.02%.

Note: in TVM Standard, C/YR is the same number as P/YR in TVM calculations, since most interest calculations are based on the same number of payments and compounding periods per year, and interest rate conversions are commonly linked to a subsequent TVM calculation. This feature is provided for your convenience, but this means modifying one number also modifies the other when you are calculating in TVM Standard.

The IConv menu permits you to solve for C/YR, but the result is not always a positive integer. TVM calculations, however, require C/YR to be an integer larger than zero. If you attempt to perform a TVM calculation without a valid value for C/YR or P/YR, an invalid P/YR error (ER: Invalid P/YR) will occur.

If you set C/YR to 0, the resulting interest conversions are calculated assuming a continuous compounding. As stated above, 0 is not a valid value for P/YR or C/YR when used in TVM calculations, and you will have to reset it to a valid value before performing TVM calculations.

To reset the menu items to their default values, with any item of the Interest Conversion menu displayed press :x. With IConv displayed, press Ito reset, or Oto cancel. To exit the menu, press Oonce again.

34 Time Value of Money