What Is Effective-Annual-Rate?
The Effective Annual Rate is an important tool that allows the evalution of true return on an investment or true interest rate on a loan.
Effective Annual Rate is the rate of interest that an investor can earn in a year after taking into consideration compounding , such as Continuously , Daily , Monthly , Bi-Monthly , Semi-Monthly , Weekly , Bi-Weekly , Quterly , Yearly , Semi-Yearly etc .
Effective Annual Rate Formula:
i = (1 + r / m)m - 1
i = Effective Annual Rate in decimal form
I = i * 100
I = Effective Annual Rate in percent
m = Compounding Periods
R = Rate of interest per period in percent
r = Interest Rate in decimal form
How to use Effective Annual Rate Calculator?
Step by step procedure for Effective-Annual-Rate Calculator is as follows.
Step 1: Input appropriate value .
Step 2: Now click on "Compute" button to get result.
You will get Effective Annual Rate as per your value input.