# EFFECT

EFFECT(nominal_rate, npery)

Returns the effective interest rate given a nominal interest rate and compounding frequency.

 nominal_rate The interest rate for the year. npery The number of compounding periods per year.

 REMARKS
 * For an illustrated example refer to the [[Effective Interest]] page.* This function is closely related to the NOMINAL function.* An effective interest rate is an interest rate that is compounded annually making it easy to compare different interest rates.* The Effective Rate is also known as the Annual Rate, Effective Annual Rate (EAR) or Annual Equivalent Rate (AER).* If any of the arguments are not numeric, then #VALUE! is returned.* The "nominal rate" can either be entered with a percentage sign or as a decimal.* If "nominal_rate" = 0, then #NUM! is returned.* If "npery" is not an integer, it is truncated.* If "npery" < 1, then #NUM! is returned.* For the Microsoft documentation refer to support.microsoft.com* For the Google documentation refer to support.google.com

 A 1 =EFFECT(5/100,1) = 5.000% 2 =EFFECT(5%,1) = 5.000% 3 =EFFECT(5%,2) = 5.062% 4 =EFFECT(5%,12) = 5.116% 5 =EFFECT(5%,365) = 5.127% 6 =EFFECT(5,2) = 1125.000% 7 =EFFECT(5%,-2) = #NUM! 8 =EFFECT("some text",2) = #VALUE! 9 =EFFECT(5%,"some text") = #VALUE!

 1 - If you have an nominal interest rate of 5% compounded annually, what is the effective interest rate.2 - This is the same as 1.3 - If you have an nominal interest rate of 5% compounded semi-annually, what is the effective interest rate.4 - If you have an nominal interest rate of 5% compounded monthly, what is the effective interest rate.5 - If you have an nominal interest rate of 5% compounded daily, what is the effective interest rate.6 - where "nominal" > 17 - what if npery < 08 - what if "nominal_rate" is not numeric9 - what if "npery" is not numeric