## Purpose

## Return value

## Syntax

`=EFFECT(nominal_rate,npery)`

*nominal_rate*- The nominal or stated interest rate.*npery*- Number of compounding periods per year.

## How to use

The EFFECT function calculates the effective annual interest rate, given a nominal interest rate and the number of compounding periods per year. Nominal interest rate is the stated rate on the financial product. Effective annual interest rate is the interest rate actually earned due to compounding. For example, with a nominal rate of 6.00% and interest compounded quarterly, EFFECT returns 6.09%:

```
=EFFECT(0.06,4) // returns 0.0614
```

In the example shown, the formula in D5, copied down, is:

```
=EFFECT(B5,C5)
```

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

### Notes

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