Effective Annual Rate (EAR)

Exercise ID: tvm-real-012

Mode SwitchingInterest Conversion

Description

A credit card charges a nominal annual rate of 18%, compounded daily (365 days). Calculate the Effective Annual Rate (EAR).

Given Values

NOM

C_Y

365

Objective

Calculate EFF

Steps

Total 10 steps

Step 1:Clear TVM Registers

💡 Always clear TVM before starting a new problem.

Key Sequence:

2ndFV

Before Key Press:

0.00

After Key Press:

0.00

⏱ 1500ms

Step 2:Open ICONV Worksheet

Key Sequence:

2nd2

Before Key Press:

0.00

After Key Press:

NOM= 0.00

⏱ 1000ms

Step 3:Input NOM = 18

Key Sequence:

Before Key Press:

NOM= 0.00

After Key Press:

⏱ 1400ms

Step 4:Enter NOM

Key Sequence:

ENTER

Before Key Press:

After Key Press:

NOM= 18.00

⏱ 1000ms

Step 5:Move to EFF

Key Sequence:

DOWN

Before Key Press:

NOM= 18.00

After Key Press:

EFF= 0.00

⏱ 800ms

Step 6:Move to C/Y

Key Sequence:

DOWN

Before Key Press:

EFF= 0.00

After Key Press:

C/Y= 1.00

⏱ 800ms

Step 7:Input C/Y = 365

Key Sequence:

365

Before Key Press:

C/Y= 1.00

After Key Press:

365

⏱ 1600ms

Step 8:Enter C/Y

Key Sequence:

ENTER

Before Key Press:

365

After Key Press:

C/Y=365.00

⏱ 1000ms

Step 9:Move back to EFF

Key Sequence:

UPUP

Before Key Press:

C/Y=365.00

After Key Press:

EFF= 0.00

⏱ 1000ms

Step 10:Compute EFF

Key Sequence:

CPT

Before Key Press:

EFF= 0.00

After Key Press:

EFF= 19.72

⏱ 1500ms

Calculator Display

      0.00

Speed:← →

💡 Press Space to quickly pause/play

⚠️ Common Mistakes and Traps

1.Using 360 days instead of 365 (unless specified)
2.Confusing NOM and EFF fields
3.Not pressing CPT after entering values

(Expand the sections to view answers and common mistakes before printing.)

💡 Tip: Use your browser's print function (Ctrl+P or Cmd+P) to export this exercise as a PDF or print it on paper.

12 / 15