NeoCal Documentation

NeoCal for Palm OS User Guide

Interest Conversion

This application uses the , , and registers to convert between the annual nominal and effective interest rates. The effective rate takes compounding into consideration based on the number of periods per year.

  1. Pressing stores 12 in the periods per year register. This is equivalent to monthly compounding.
  2. Pressing stores 6 percent into the nominal interest rate register. This is equivalent to 0.5 percent per month.
  3. Pressing calculates and stores 6.17 percent for the annual effective rate.

Since and share the same register, the annual effective rate can easily be converted for use by the time value of money application. In the United States, the annual effective rate is equivalent to the annual percentage rate (APR).