### What Is Equivalent-Interest-Rate?

The AER is the actual interest rate that an investor will earn for an investment, a loan, or another product, based on compounding. The AER reveals to investors what they can expect to return from an investment (the ROI)â€”the actual return of the investment based on compounding, which is more than the stated, or nominal, interest rate. Using following Formula -:

**Equivalent Interest Rate :**
i = q * [(1 + r/m)^{m/q} - 1]

where

i = Equivalent Interest Rate

r = Interest Rate in decimal form

m = Compounding Periods

q = New Compounding Periods

### How to use Equivalent Interest Rate Calculator?

Step by step procedure for Equivalent Interest Rate Calculator is as follows .

**Step 1: **Input appropriate value .

**Step 2: **Now click on "Calculate" button to get result.

You will get Equivalent Interest Rate as per your value input.