# Manuals/calci/EFFECT

**EFFECT (NominalInterestRate,CompoundingPeriodsPerYear)**

where,

- is the nominal interest rate, and
- is the number of compounding periods per year.
- EFFECT(), returns the effective annual interest rate.

## Description

EFFECT (NominalInterestRate,CompoundingPeriodsPerYear)

- Arguments and should be positive numeric values.
- should be >0 and should be >1.
- For invalid arguments, Calci returns an error message.
- Formula: Effective interest rate is calculated as follows -

## Examples

Consider the following example that shows the use of EFFECT function:

6% | 8.5% | |

3 | 4 | |

=EFFECT(A1,A2):Displays 0.06120800000000015as a result. =EFFECT(B1,B2):Displays 0.08774796172119137as a result. =EFFECT("6%",4):Displays 0.06136355062499965as a result.

## Related Videos

## See Also

## References