# A lifetime ago, the tutor studied financial planning. That’s when he got acquainted with the HP-10B.

Of the financial calculators I know, the Hewlett-Packard HP-10B is potentially the easiest to use.

One feature of particular value to anyone in financial math is interest rate conversions. Let’s look at how they’re done on the HP-10B.

**Example 1**: Find the effective annual interest rate if the nominal rate is 3.1% compounded monthly.

Solution: On the HP-10B, there is an orange key on the left side, second from the bottom. You press it to access the orange function printed above a given key.

In this case, we know the nominal rate is 3.1%. We type in 3.1. Next, we press the orange key, then the I/YR key (above which is printed NOM%).

To tell the calculator the compounding is monthly, we type in 12, then press the orange key, followed by the PMT key – which, you’ll see, has P/YR printed above.

Now, we press the orange key again, then the PV key. Above PV, you’ll see EFF%.

The answer 3.14 appears across the screen. Apparently, the nominal rate of 3.1% compounded monthly is the effective rate of 3.14% compounded annually.

Now, let’s imagine you know the effective annual rate, but you want to convert to a nominal rate.

**Example 2**: Find the nominal rate, with weekly compounding, of 4.2% compounded annually.

Solution: This time, we know the effective rate of 4.2% compounded annually. We type in 4.2, then press the orange key, then the PV key. Next, we type in 52, the orange key again, then the PMT key. Finally, we press the orange key, then the I/YR key. The answer 4.12 appears. Apparently, the rate of 4.2% compounded annually is equivalent to a nominal rate of 4.12% compounded weekly.

I’ll be covering more features of the HP-10B in future posts. HTH:)

Source:

*HP-10B Business Calculator Owner’s Manual*. Corvallis, OR: Hewlett-Packard, 1988.

Jack of Oracle Tutoring by Jack and Diane, Campbell River, BC.

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