Whole document tree EFFECTDescriptionEFFECT calculates the effective interest rate from a given nominal rate. Effective interest rate is calculated using this formula: (1 + @r / @nper) ^ @nper - 1 where: @r = nominal interest rate (stated in yearly terms) @nper = number of periods used for compounding ExamplesFor example credit cards will list an APR (annual percentage rate) which is a nominal interest rate. For example if you wanted to find out how much you are actually paying interest on your credit card that states an APR of 19% that is compounded monthly you would type in: =EFFECT(.19,12) and you would get .2075 or 20.75%. That is the effective percentage you will pay on your loan. |