How to use the Excel NOMINAL function

Summary

The Excel NOMINAL function returns the nominal interest rate, given an effective annual interest rate and the number of compounding periods per year. The effective rate is the actual rate due to compounding. The nominal rate is typically the stated rate.

Purpose

Get annual nominal interest rate

Return value

Nominal interest rate

Syntax

=NOMINAL (effect_rate, npery)

Arguments

effect_rate - The effective annual interest rate.
npery - Number of compounding periods per year.

Usage notes

The Excel NOMINAL function calculates the nominal interest rate, given an effective annual interest rate and the number of compounding periods per year. Nominal interest rate is typically the stated rate on a financial product. Effective annual interest rate is the interest rate actually earned due to compounding. For example, with an effective rate of 6.14% and interest compounded quarterly, NOMINAL returns 6.00%:

=NOMINAL(0.0614,4) // returns 0.06

In the example shown, the formula in D6, copied down, is:

=NOMINAL(B6,C6)

Format the result as a percentage to display with % symbol.

Notes

Npery should be an integer (Excel will truncate if not).
The effective rate should be a number between 0 and 1.

Related functions

Excel EFFECT Function

The Excel EFFECT function returns the effective annual interest rate, given a nominal interest rate and the number of compounding periods per year. Effective annual interest rate is the interest rate actually earned due to compounding.

Good links

Microsoft NOMINAL function documentation

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