Want to calculate the annual equivalent rate? Enter the nominal interest rate and compounding frequency, and our Annual Equivalent Rates Calculator Tool (AER) will show you the equivalent annual rate.
Annual Equivalent Rates (AER) Calculator
Annual Equivalent Rates Calculator (AER)
Component | Description |
---|---|
Nominal Interest Rate | The stated annual interest rate. |
Number of Compounding Periods per Year | The number of times interest is compounded in a year. |
Annual Equivalent Rate (AER) | The effective annual interest rate, considering the compounding periods. |
Formula | AER = (1 + Nominal Interest Rate / Number of Compounding Periods)^(Number of Compounding Periods) – 1 |
Purpose | Used to compare the effective annual interest rates of financial products with different compounding periods. |