The NOMINAL function calculates the annual nominal interest rate. This uses the given effective annual interest rate, effect_rate, and the number of periods per year where compound interest is applied, npery. NOMINAL uses the formula:
For example, the bank quotes an annual interest of 7.19% and calculates interest quarterly, which is then compounded over the year. What is actual interest rate in a given quarter? Use the formula:
NOMINAL(7.19%, 4)/4
which returns a rate of 1.75%.
NOMINAL is the inverse of EFFECT (see EFFECT).
See also: