Finance
Effective Annual Rate
EAR from nominal rate and compounding.
Formula
Formula
EAR = (1 + rn)n − 1
Variables
| Symbol | Definition | Type & range | Units | Role |
|---|---|---|---|---|
| r | nominal annual rate | real number (ℝ) | — | input |
| n | compounding periods/yr | integer (ℤ) | — | input |
Try it yourself
Interactive calculator
Worked examples
Example 1
Givennominal rate (%) = 12, periods/yr = 12
Result12.68250301
Example 2
Givennominal rate (%) = 6, periods/yr = 4
Result6.136355062