University of Central Florida (UCF) FIN3403 Business Finance Practice Exam 2

When calculating the Annual Percentage Yield (APY) using a financial calculator, the sequence of inputs is essential to arrive at the correct result. The correct answer involves recognizing that the "Shift EEF%" function is typically used to compute the Effective Annual Rate (EAR) based on the inputs you've previously entered regarding the interest rate, number of compounding periods, and future value.

In this context, the process generally starts with setting the number of compounding periods per year and the interest rate. Once you have entered the interest rate and future value, the final step involves using the "Shift EEF%" function to derive the APY from the compounded rates. This is the last input because it's the culmination of all previous entries, which transforms your raw data into the effective yield.

The reason this input is last is that it requires that you have already established the foundational parameters (like compounding periods and interest rates) upon which the effective yield will be calculated. It’s a computational adjustment rather than an initial input, making it the final step in the calculation process.