Interest/Discount Conversions Calculator
Compounds/Yr = 1
Compounds/Yr = 1
This template converts interest/interest, interest/discount, discount/interest, or discount/discount rates with different compounding periods. A discount rate is distinguished from an interest rate by a negative compounding period. A continuous compounding period is entered as 0 for both interest and discount rates.
Interest/Discount% : First interest/discount rate (enter as percent)
Compounds/Yr : Compounding periods per year (enter negative number for discount rate)
Interest/Discount% : Press the equal sign to compute the equivalent interest/discount rate
after entering the number of compounding periods.
Compounds/Yr. : Compounding periods per year (enter negative number for discount rate)
Formula: For rates r and d, (1+r/m)^m=(1+d/n)^n where m and n are negative for discount rates. Continuous compounding is handled through the exp() and ln() functions.
Source: The Theory of Interest, 2nd edition, Stephen G. Kellison, 1991, pp. 17-21.
Contributed by Don Phillips
Example 1: Convert a 10% interest rate compounded monthly to a discount rate compounded semi-annually.
-Enter 10% for the interest rate.
-Enter 12 for the # of compounding periods.
-Enter -2 for the # of compounding periods. The negative sign indicates that a discount rate will be computed.
-The discount rate is automatically computed: 9.715%.
Example 2: Convert a discount rate of 7.25% compounded quarterly to an interest rate compounded continuously.
-Enter 7.25% for the discount rate.
-Enter -4 for the # of compounding periods.
-Enter 0 for continuous compounding.
-The interest rate is automatically computed: 7.317%.