EFFECT (Rate, NumberOfPeriods) EFFECT (Rate; NumberOfPeriods)
Rate
Number Number
The nominal interest rate.
NumberOfPeriods
Number Number
The number of times interest is credited or compounded during the period that the rate parameter applies to.
Returns
Number Number
The effective compounded interest rate.
Returns the effective annual interest rate, given a nominal rate and the number of compounding periods per year. The effective rate accounts for the effect of intra-year compounding. Use NOMINAL to perform the reverse calculation.
Example
EFFECT (0.08, 12)
EFFECT (0,08; 12)
Returns roughly 8.30%, which is the effective annual interest rate for a nominal rate of 8% compounded monthly.