.Effect(NominalRate, PeriodCount)
NominalRate. Nominal annual interest rate. Parameter value must be greater than zero.
PeriodCount. Number of compounding periods per year. Parameter value must be greater or equal to one.
NOTE. To determine the parameter, specify either the parameter value or the cell address where it is located.
It returns the effective, actual, annual interest rate if nominal annual interest rate and the number of compounding periods per year are set.
The function is calculated according to the following formula:
.
| Formula | Result | Description |
| =Effect(0.25, 4) | 0,27 | The actual interest rate based on the annual rate of 0.25 and four periods per year, over which compound interest is accrued. |
| =Effect(B6, 12) | 0,16 | The actual interest rate based on the annual rate, defined in the B6 cell, and twelve periods per year, over which compound interest is accrued. The B6 cell contains the 0.15 value. |
See also:
Function Wizard │ Financial Functions │ Nominal