Posted by Dave T on May 06, 2000 at 18:32:27:
Never said that I used an INTERNET financial calculator, but I will tell you how to figure this out yourself with your financial calculator.
Just enter the following:
PV = -100
i = 0.019/365
PMT = 0
NPER = 365
Now solve for FV. These numbers assume that you deposit $100 (PV) into a savings account that earns 1.9% annual interest compounded daily (0.019 divided by 365 gives the daily interest rate). At the end of 365 days (NPER), with no additional deposits (PMT = 0) your balance (FV) is $101.918. Round that off to your initial $100 deposit plus $1.92 interest earned over the course of the year. This illustrates that you would need a simple interest rate of 1.92% to achieve the same result as 1.90% compounded daily.
As to the rest of your comment, remember that your banker is evaluated on her productivity – one element that contributes to productivity is the number of loan products sold to consumers. This banker seems to be primarily motivated to sell you a loan product that makes money for the bank, regardless of whether that product is in your best interest (no pun intended).