Continuous compounding, Keys: display: description, 0@m]0 – HP 10B User Manual
Page 101: Example, Шёта 19.72
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Keys:
Display:
Description:
450 r^Mlixl 10
0.10
Stores interest.
0 60 0 365 0
7.40
Calculates interest owed.
0@M]0
457.40
Calculates total owed.
Continuous Compounding
The equation Гог calculating an cfTcclive rale for continuous compounding
is:
EFF%
= (c
1
) X 100
To solve a continuous compounding problem complete these steps:
1
. Compute the annual cfTcctivc rate using the above equation.
2« Either use this elTcctive rate in your calculations with an annual
period
{P/YR
= 1) or convert this rate so that it applies to your pay
ment period. In the following example,
P/YR
= 12 so you have to
calculate a new
NOM%
using the interest rate conversion applica
tion 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?
Keys:
Display:
Description:
18(1]
0.18
Divides nominal rate by
100
.
шт
1.20
Raises*.’ to0.18 power.
0
1
0
100
0
19.72
Calculates annual
efTcciivc rate.
ШЁта
19.72
Stores effective rale.
^2ШШШ
12.00
Sets payments per year.
98
8: Addition^] Eiamplet