Nominal/effective conversion

Convert between nominal and effective rates considering compounding frequency.

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Calculation specification

Reviewed on:

Formula basis

From nominal r, R=(1+r/k)^k−1. From effective R, r=k×{(1+R)^(1/k)−1}.

Calculation method

Converts between nominal and effective annual rates for the selected number of equal compounding intervals per year.

Exclusions and checks required

  • Equal compounding intervals and a constant rate within the year are assumed.
  • The result can differ from an APR or effective cost that includes fees, tax, or day-count rules.

Example input:：Converting 5% nominal with monthly compounding

annualRate
5
compoundRateType
nominal
periodsPerYear
12
digits
10

The conversion reflects only the selected discrete compounding frequency.

FAQ

Who is this calculator for? Nominal/effective conversion

Convert between nominal and effective rates considering compounding frequency.

What values should I enter?

Applies to: Compound interest / R = (1+r/k)^k − 1 / r = {(1+R)^(1/k) − 1} × k

How should I interpret this estimate?

Converts between nominal and effective annual rates for the selected number of equal compounding intervals per year.

How to use

  1. Enter your input values and press Calculate.
  2. Review the result and compare it with expected context.
  3. From nominal r, R=(1+r/k)^k−1. From effective R, r=k×{(1+R)^(1/k)−1}.