Formulas and functions > Functions from A to Z > NOMINAL (nominal interest rate)

Syntax:

NOMINAL(EffRate, NPerYear)

Description:

This returns the nominal annual interest rate based on the effective annual interest rate and the number of compounding periods per year.

EffRate is the effective annual interest rate.

NPerYear is the number of compounding periods per year (must be at least 1).

Example:

An investment with an effective annual interest rate of 5% is compounded quarterly. How high is the nominal annual interest rate?

NOMINAL(5%, 4) returns approx. 4.91%