Effective Interest Rate Calculator Tool

Effective Interest Rate Calculator

Effective Interest Rate Calculator

Effective Interest Rate Calculator

Component Description
Nominal Interest Rate The stated interest rate on a loan or investment.
Number of Compounding Periods The number of times interest is compounded per year.
Effective Interest Rate The annual interest rate that takes into account compounding.
Formula Effective Interest Rate = (1 + Nominal Interest Rate / n)^n - 1
Purpose Used to compare the true cost or return of loans and investments with different compounding periods.

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