EFFECT(nomrate, npy)
where,
- is the nominal interest rate, and
- is the number of compounding periods per year.
EFFECT() calculates the effective annual interest rate.
Description
EFFECT(nomrate, npy)
- 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 -
<math>r = {1 + /frac{nomrate,npy}/power{npy} - 1
Examples
Consider the following example that shows the use of EFFECT function:
| 6% | 8.5% | |
| 3 | 4 | |
=EFFECT(A1,A2): Displays 0.06120800000000015 as a result.
=EFFECT(B1,B2): Displays 0.8774796172119137 as a result.
=EFFECT("6%",4): Displays 0.06136355062499965 as a result.