NOMINAL(effect_rate, npery)

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:

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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:

Other financial functions