EFFECT

Formulas / EFFECT
Calculate an annual interest rate.
=EFFECT(nominal_rate,npery)
  • nominal_rate - required, nominal interest rate
  • npery - required, number of periods per year

Examples

  • =EFFECT(A2,A3)

    The EFFECT function is used to calculate the effective interest rate of a certain period. For example, the formula calculates the effective interest rate of the terms in A2 and A3.

  • =EFFECT(A2,A3)

    Let's say you have two terms, 10% for 3 months and 6% for 6 months. To calculate the effective interest rate for these terms, you would use the formula above, where A2 contains 10% and A3 contains 6%.

  • =EFFECT(0.05/4,4)

    The EFFECT function can also be used to calculate the effective annual yield of a loan. For example, if you have a loan with an annual interest rate of 5% paid out in quarterly payments, you can use the formula above to calculate the effective annual yield of the loan.

  • =EFFECT(0.05/12,12)

    The EFFECT function can also be used to calculate the effective interest rate of a series of payments. For example, if you have a loan with an annual interest rate of 5% paid out in monthly payments, you can use the formula to calculate the effective interest rate of the loan.

Summary

The EFFECT function calculates an annual interest rate based on a nominal annual interest rate and the number of compounding periods per year. It is used to calculate interest rate over a given period of time.

  • The EFFECT function calculates an annual interest rate. It requires two arguments: nominal_rate (the nominal interest rate) and npery (the number of periods per year).


Frequently Asked Questions

What is the EFFECT function?
The EFFECT function is a function in Sourcetable which calculates effective annual interest rates.
What types of arguments does the EFFECT function accept?
The EFFECT function only accepts numerical arguments and ignores non-numerical arguments.
How do I use the EFFECT function in Sourcetable?
To use the EFFECT function in Sourcetable, you need to enter the function in a cell along with the required arguments. The syntax for the EFFECT function is: EFFECT (nominal_rate, npery).
What are the arguments of the EFFECT function?
  • Nominal_rate: This is the nominal interest rate per period.
  • npery: This is the number of compounding periods per year.
What does the EFFECT function return?
The EFFECT function returns the effective annual interest rate.
What is an effective annual interest rate?
An effective annual interest rate is the rate of interest that is earned on an investment over a period of one year, taking into account compounding of the interest.

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