How to use the EFFECT function
Author: Oscar Cronquist Article last updated on May 11, 2022
The EFFECT function calculates the effective annual interest rate, given the nominal annual interest rate and the number of compounding periods per year.
Formula in cell D3:
=EFFECT(B3,C3)
Excel Function Syntax
EFFECT(nominal_rate, npery)
Arguments
| nominal_rate | Required. The nominal interest rate. |
| npery | Required. The number of compounding periods per year. |
Comments
This is how the EFFECT function is calculated:
=(1+(nominal_rate/npery))^npery
Functions in this article
Functions in 'Financial' category
The EFFECT function function is one of many functions in the 'Financial' category.
Calculates the accrued interest for a security that pays periodic interest.
Calculates the accrued interest for a security that pays interest at maturity.
Calculates the depreciation for each accounting period. This function is designed for the French accounting system.
Calculates the depreciation for each accounting period.
Calculates the accumulated interest based on a start and end period on a loan.
Calculates the accumulated principal based on a start and end period on a loan.
Calculates the depreciation of an asset for a given period using the fixed-declining balance method.
Calculates the depreciation of an asset for a given period using the double-declining balance method or based on user input.
Converts a decimal number to its equivalent in fractional numbers, used in securities denominated in dollars.
Calculates the effective annual interest rate, given the nominal annual interest rate and the number of compounding periods per year.
Returns the future value of an investment based on a constant interest rate.
Calculates the interest payment for a specific period for an investment based on repeated constant payments and a constant interest rate.
Calculates the interest paid during a specific period of an investment.
Calculates the nominal annual interest rate based on the effective rate and the number of compounding periods per year.
Calculates the number of periods for an investment based on periodic, constant payments and a fixed interest rate.
Calculates how many periods required by an investment to reach a given amount based on a rate in percentage.
Returns the payment needed for borrowing a fixed sum of money based on constant payments (annuity) and interest rate.
Calculates the principal payment for a specific period for an investment based on repeated constant payments and a constant interest rate.
Calculates the price per $100 nominal value of a bond that pays interest at maturity.
Calculates the net present value for an investment or loan.
Returns the interest rate per period of an annuity.
Calculates the growth of an investment in percent per period.
Calculates the yearly asset depreciation of a given year.
Calculates the par amount (face value) for a Treasury bill.
Calculates the yield for a Treasury bill.
Calculates the depreciation of an asset for a given period using the double-declining balance method or based on user input, you may use partial periods in this function.
Calculates net present value for cash flows that may or may not be periodic
Calculates the yield for a security that pays interest. The YIELD function is designed to calculate the bond yield.
Excel function categories
Excel functions that let you resize, combine, and shape arrays.
Functions for backward compatibility with earlier Excel versions. Compatibility functions are replaced with newer functions with improved accuracy. Use the new functions if compatibility isn't required.
Perform basic operations to a database-like structure.
Functions that let you perform calculations to Excel date and time values.
Let's you manipulate binary numbers, convert values between different numeral systems, and calculate imaginary numbers.
Calculate present value, interest, accumulated interest, principal, accumulated principal, depreciation, payment, price, growth, yield for securities, and other financial calculations.
Functions that let you get information from a cell, formatting, formula, worksheet, workbook, filepath, and other entitites.
Functions that let you return and manipulate logical values, and also control formula calculations based on logical expressions.
These functions let you sort, lookup, get external data like stock quotes, filter values based a condition or criteria, and get the relative position of a given value in a specific cell range. They also let you calculate row, column, and other properties of cell references.
You will find functions in this category that calculates random values, round numerical values, create sequential numbers, trigonometry, and more.
Calculate distributions, binomial distributions, exponential distribution, probabilities, variance, covariance, confidence interval, frequency, geometric mean, standard deviation, average, median, and other statistical metrics.
Functions that let you manipulate text values, substitute strings, find string in value, extract a substring in a string, convert characters to ANSI code among other functions.
Get data from the internet, extract data from an XML string and more.
Excel categories
Latest updated articles.
More than 300 Excel functions with detailed information including syntax, arguments, return values, and examples for most of the functions used in Excel formulas.
More than 1300 formulas organized in subcategories.
Excel Tables simplifies your work with data, adding or removing data, filtering, totals, sorting, enhance readability using cell formatting, cell references, formulas, and more.
Allows you to filter data based on selected value , a given text, or other criteria. It also lets you filter existing data or move filtered values to a new location.
Lets you control what a user can type into a cell. It allows you to specifiy conditions and show a custom message if entered data is not valid.
Lets the user work more efficiently by showing a list that the user can select a value from. This lets you control what is shown in the list and is faster than typing into a cell.
Lets you name one or more cells, this makes it easier to find cells using the Name box, read and understand formulas containing names instead of cell references.
The Excel Solver is a free add-in that uses objective cells, constraints based on formulas on a worksheet to perform what-if analysis and other decision problems like permutations and combinations.
An Excel feature that lets you visualize data in a graph.
Format cells or cell values based a condition or criteria, there a multiple built-in Conditional Formatting tools you can use or use a custom-made conditional formatting formula.
Lets you quickly summarize vast amounts of data in a very user-friendly way. This powerful Excel feature lets you then analyze, organize and categorize important data efficiently.
VBA stands for Visual Basic for Applications and is a computer programming language developed by Microsoft, it allows you to automate time-consuming tasks and create custom functions.
A program or subroutine built in VBA that anyone can create. Use the macro-recorder to quickly create your own VBA macros.
UDF stands for User Defined Functions and is custom built functions anyone can create.
A list of all published articles.
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