Sharp EL-738 1956, Conversion between APR and EFF, To change APR to EFF, To change EFF to APR

Conversion between APR and EFF

Interest rates can be converted between APR (annual, or nomi- nal percentage rate) and EFF (effective interest rate).

•The APR is an investment’s annual rate of interest when com- pounding happens only once a year. The interest rate printed on a bond is an example of an APR.

•The EFF is an investment’s annual rate of interest when com- pounding happens more often than once a year. It reflects the actual amount of return for a given nominal rate. For example, if your investment compounds monthly, then the stated nomi- nal percentage rate becomes a monthly rate, and the EFF reflects your actual annual rate of return.

Basic operations

1.Press sto clear the display. Make sure the calculator is in NORMAL mode.

2.Enter the calculation data in the following format:

•To change APR to EFF:

Number of compounding periods per year >Nominal percentage rate .P

•To change EFF to APR:

Number of compounding periods per year >Effective interest rate .!

Converting between APR and EFF

Procedure		Key operation			Display
Calculate the	s12 >18 .P
effective interest
rate for twelve
compounding					12,18¬EFF
periods with an
					1956
18% APR.
Convert this rate	12	>	19.56	.!	12,19.56¬APR
back to the origi-					1800
nal APR.

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