HP 10bII+ - Page 148

Additional Examples140
To solve a continuous compounding problem complete these steps:
1. Compute the annual effective rate using the above equation.
2. Either use this effective rate in your calculations with an annual period (P/YR = 1) or
convert this rate so that it applies to your payment period. In the following example,
P/YR = 12 so you have to calculate a new NOM% using the interest rate conversion
application 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?
Set to End Mode. Press
\¯ if BEGIN annunciator is displayed.
Table 13-6 Calculating the annual nominal rate
Keys Display Description
Jg§
0.18 Divides nominal rate by 100.
\K
1. 2 0 R a i s e s e to 0.18 power.
AJPJ::4
19.72 Calculates annual effective rate.
\Ð
19.72 Stores effective rate.
JG\Í
12.00 Sets payments per year.
\Ó
18.14 Calculates the annual nominal
rate for a monthly payment
period.
Table 13-7 Calculating the balance amount after 15 years
Keys Display Description
JV\Ú
180.00 Stores number of months.
GV:yÌ
-250.00 Stores regular payment.
YVjG7gy
Ï
-4,572.80 Stores current balance as a
negative value (like an initial
investment).
É
297,640.27 Calculates the account balance
after 15 years of payments with
18% int erest co m p o u n d e d
continuously.