Microsoft Office Tutorials and References

In Depth Information

**Using NOMINAL to Convert the Effective Interest Rate to a Nominal Rate**

Figure 13.9.

Figure 13.9.
Row 5 shows the effective interest rates for various compound-

Row 5 shows the effective interest rates for various compound-

ing periods. Row 9 shows the monthly payment difference.

ing periods. Row 9 shows the monthly payment difference.

Using

Using
NOMINAL

to Convert the Effective Interest Rate to a Nominal Rate

If you need to compare two investments, one quoting a nominal rate and one

quoting an effective rate, you can convert the effective rate to a nominal

rate by using NOMINAL.

NOMINAL
to Convert the Effective Interest Rate to a Nominal Rate

Syntax

NOMINAL(effect_rate,npery)

The NOMINAL function returns the nominal annual interest rate, given the

effective rate and the number of compounding periods per year. This function

takes the following arguments:

•
effect_rate

effect_rate
—
This is the effective interest rate.

•
npery

npery
—
This is the number of compounding periods per year.