Tuesday, February 15, 2011

Effective Annual Interest Rate Calculator

For those of us who dont know how to calculate effective annual interest rates, some nice person made a calculator for us!


Lower on the page the formula for finding effective rate is stated as;

r = [ (1+i/n)^n ] - 1

so if you had a nominal rate of 11% being compounded semi-annually, your formula would be [(1+.11/2)^2]-1 which equals .113025, which when multiplied by 100 is 11.3%.

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