How to convert EAR into SAR in case of continuous compounding using calculator?
Share
Please briefly explain why you feel this question should be reported.
Please briefly explain why you feel this answer should be reported.
Please briefly explain why you feel this user should be reported.
PV = -3,000
FV= 4,475.47
N= 5
CPT I/Y = 8.33% STO1
THEN ICONV(2) BUTTON IN YOUR CALCI
Then NOM is showing in your calci
Press arrow up C/Y then EFF is showing in your calci
EFF= 8.33% then arrow down C/Y is showing don’t put anything then arrow down SAR= 8% (CPT)
Could you please upload a video of the same. I’m not getting what to enter when c/y and nom is showing. In case of monthly compounding we’ll enter 12 in c/y buy i don’t know what to do for continuous compounding.
simple udit lets first find the EAR which is 8.32%. then converting EAR to SAR you can use formula
formula = [1+EAR] power 1/m – 1 *m
in calci :
1.0832
1.0832 Yx (1/5) = 1.01611
1.01611 – 1 = .01611 *5 = .08056*100 = 8.056 which is 8%
i hope this ll help you.
Thanks a lot i’m able to solve using this method now. However it would be great if you explain how to calculate using ICONV too.
for usig ICONV method lets take a example, for eg if u want to know the EAR of 8% compounded monthly in ICONV.
in calci
2nd ICONV,
NOM = 8 enter
arrow down come to C/Y put 12 because compounded monthly
arrow down come to EFF and press EFF =8.29%
ALSO you can check the answer in
[1+i/m] squareM -1 *100 = 8.29%
I hope this clear your doubt
Thank you but could you tell what to enter in C/Y in case of continuous compounding.
GUYS from where did you all learn’t The ICONV method. In the lectures Sir tought us using Ln/ex method for calculating Continuously compunding rate or Ear