Using HP 10Bii to do semiannual AND continuous compounding

# Using HP 10Bii to do semiannual AND continuous compounding...

This preview shows page 1. Sign up to view the full content.

Using HP 10-BII for Compounding More Frequently Than Annually (Using Example, Pg. 161) Semiannual Compounding: [ ] [C ALL] 2 P/YR 100 [PV] 2 [N] [N] ( or 2 [N] ) 8 [I/YR] Press [FV] to get -116.99, which is \$116.99 Quarterly Compounding: (think ahead: should I have more or less in my account if I calculate and add interest more often?) [ ] [C ALL] 4 P/YR 100 [PV] 2 [N] [N] ( or 2 [N] ) 8 [I/YR] Press [FV] to get -117.17, which is \$117.17 (slightly more with quarterly compounding) Continuous Compounding Step 1 – Enter interest rate in decimal form then multiply it by number of years
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Step 2 – raise natural number e to that power by pressing █ [ e x ] key (it’s the 1 key shifted) Step 3 – multiply by present value to get the future value Example, bottom of page 162, showing these steps: Key in: 0.08 x 2 = Press █ [ e x ] key to get 1.17351 Multiply: × 100 = You should get 117.351, or \$117.35 Note: to get the effective annual rate of 8% continuously compounded, enter: 0.08 █ [ e x ] – 1 = 0.0833 or 8.33%. This is the fastest money can grow, given an 8% stated, or nominal, interest rate....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online