How do you calculate the following:
Company L enters into an agreement with Company B to lend it $1m - The interest to be paid is 5% for each of the first 2 years and 7% for each of the next 2 years, annually in arrears. The loan must be repaid after 4 years. My text states that using a financial calculator the effective interest rate is calculated as 5.24%
- If you need clarification, ask it in the comment box above.
- Better answers use proper spelling and grammar.
- Provide details, support with references or personal experience.
Tell us some more! Your answer needs to include more details to help people.You can't post answers that contain an email address.Please enter a valid email address.The email address entered is already associated to an account.Login to postPlease use English characters only.
Tip: The max point reward for answering a question is 15.
To use the power, you use the y to the x key, above the EXP key. To enter 2 to the power of 4, you enter 2 hit the y to the x key and enter 4 and hit enter.
To use percent function, you enter the percent key after the number. To calculate Interest, where Interest = Principal x Interest x Time. For example, if the principal is $1,000, the interest rate is 8%, and time/term is 4 years, we would enter 1000 x 8 Percent x 4. When the8 is entered followed by the percent key, it should turn into 0.08.
Page 24 of the attached manual shows you how to calculate the effective interest rate. I couldn't find an iconv function, but there are functions to move between the simple and effective interest rate.
Hi there, if you are following the example from page 24 of the manual - The steps are as follows - reset or clear the previous values by pressing the orange key (2nd F) and MODE.
Then make sure that BGN is not displayed (To do this press 2nd F and FV (above it you will see BGN/END)). To set the number of payments per year press 2nd F I/Y (above it is P/Y). Type in 12 and press ENT. Press the down arrow key and to make sure C/Y also says 12 (12 compounding periods per year). Then press on. Calculate the total number of payments - to do this type in 20 2nd F N (to get xP/Y) and then store the answer in N by pressing N again. (Your screen should say ANS -> 240.00)Type in your present value 56000 and press PV to store it. Enter the monthly payment press +/- 440 PMT. Enter your future value (press 0 then FV). Now to calculate the interest rate press COMP I/Y. It should give you 7.17 %
A very common error is not pressing N to store the number of total payments into the calculator.
If this is not the example you meant, please let me know - and I will explain the other example.
I'm trying to find out how to calculate the effective rate on this machine. Example, I receive a 5% interest on a 4 month basis, what will be my annual effective rate ? In fact, what are the steps to follow ?