Effective Interest Rate Calculator

Calculate the effective annual interest rate (EAR) based on the nominal interest rate and compounding frequency.

Inputs

Nominal Annual Rate (%)

0.1100

Compounding Periods Per Year

1365

Calculation Results

Effective Annual Rate

10.47%

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Formula & Mathematical Explanation

\displaystyle r_{eff} = \left(1 + \frac{r_{nom}}{n}\right)^n - 1

The effective interest rate represents the true annual rate by taking into account the impact of compounding interest over the compounding periods (n) per year.