Apple iWork '09 - Manual (Page 119)

Chapter 6 Financial Functions 119
EFFECT
The EFFECT function returns the effective annual interest rate from the nominal annual
interest rate based on the number of compounding periods per year.
EFFECT(nominal-rate, num-periods-year)
 nominal-rate: The nominal rate of interest of a security. nominal-rate is a number
value and is either entered as a decimal (for example, 0.08) or with a percent sign
(for example, 8%).
 num-periods-year: The number of compounding periods per year. num-periods-
year is a number value and must be greater than 0.
Examples
=EFFECT(0.05, 365) returns approximately 5.13%, the effective annual interest rate if 5% is
compounded daily.
=EFFECT(0.05, 12) returns approximately 5.12%, the effective annual interest rate if 5% is compounded
monthly.
=EFFECT(0.05, 4) returns approximately 5.09%, the effective annual interest rate if 5% is compounded
quarterly.
=EFFECT(0.05, 2) returns approximately 5.06%, the effective annual interest rate if 5% is compounded
semiannually.
=EFFECT(0.05, 1) returns approximately 5.00%, the effective annual interest rate if 5% is compounded
annually.
Related Topics
For related functions and additional information, see:
“NOMINAL” on page 129
“Common Arguments Used in Financial Functions” on page 341
“Listing of Financial Functions” on page 96
“Value Types” on page 36
“The Elements of Formulas” on page 15
“Using the Keyboard and Mouse to Create and Edit Formulas” on page 26
“Pasting from Examples in Help” on page 41