Effective Interest Rate
Formula
(1 + r/n)^n - 1
Interactive Calculator
| Component | Value |
|---|---|
| Nominal Rate(decimal) | |
| Compounding Periods Per Year | |
| Effective Interest Rate | — |
CategoryTime Value of Money
ComponentsEffective Interest Rate; Nominal Rate (decimal); Compounding Periods Per Year
Example(1 + 0.12/12)^12 - 1 = 12.68%
External Links
- Effective interest rate — Wikipedia