Effective Annual Rate Calculator

It is a common truth that investments should be made carefully. Sometimes, people who do not have an impressive experience in investing money have the intention to try and earn.

The effective annual interest rate of an investment is a rate where the compounding occurs more than once per year. In general, this type of interest rate may seem complicated to novice investors. Some people try to calculate this rate themselves using formulas, while it is enough to input only two necessary parameters – the annual interest rate and the number of compounding periods in a year. In seconds, you will see the detailed information you were looking for.

Effective Annual Rate Formula

The Effective Annual Rate Calculator uses the following formula:

• Effective Annual Interest Rate (i) = (1 + r/n) ⁿ − 1
• Where,
• i is the effective annual interest rate (expressed as a decimal),
• r is the nominal interest rate (expressed as a decimal),
• n is the number of compounding periods per year.

Check out these other free online investment calculators:

• - Compound Annual Growth Rate Calculator
• - Simple and Compound Interest Calculator
• - US Treasury Bill Calculator