This article describes the formula syntax and usage of the EFFECT function in Microsoft Excel.


Returns the effective annual interest rate, given the nominal annual interest rate and the number of compounding periods per year.


EFFECT(nominal_rate, npery)

The EFFECT function syntax has the following arguments:



Copy the example data in the following table, and paste it in cell A1 of a new Excel worksheet. For formulas to show results, select them, press F2, and then press Enter. If you need to, you can adjust the column widths to see all the data.

0.0525Nominal interest rate
4Number of compounding periods per year
=EFFECT(A2,A3)Effective interest rate with the terms above0.0535427

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