NOMINAL() calculates the annual nominal interest rate of a loan. This function is the opposite of EFFECTIVE().
Use NOMINAL() to determine the nominal annual interest rate, given the effective rate and the number of compounding periods per year.
For example, if you know the effective annual rate on your credit card, but want to know the rate actually used to calculate interest on a monthly basis, you would use this function. For more information, see Financial Functions.
NOMINAL(effective_rate, periods)
| • | effective_rate is the effective annual interest rate |
| • | periods is the number of compounding periods per year |
| • | periods is always truncated to an integer |
The result will be returned to eight decimal places, 0.12345678 or 12.345678%.
If you enter an obviously invalid parameter such as a negative interest rate, Analyzer returns an error.
If you know that the effective annual rate on your credit card is 19.56%, to calculate the rate used monthly, specify:
NOMINAL(.1956,12) = 0.17998457
This shows that the monthly rate is 18%.