Returns the effective annual interest rate. Excel: EFFECT

Contents

Interface Function Documentation Page Comments

Interface

#include <codecogs/finance/banking/interesteffective.h>

using namespace Finance::Banking;

	double	interestEffective (double rate, int npery) Returns the effective annual interest rate. Excel: EFFECT
	Real	cc_interestEffective (Real rate, Integer npery) This function is available as a Microsoft Excel add-in.

Function Documentation

This function computes the effective annual interest rate, based on the nominal interest rate and the number of compounding periods per year.

It is based on the following equation, where

• rate is the nominal interest rate, and
• npery is the number of compounding periods per year,

expressed as an integer.

Example 1:

#include <stdio.h>
#include <codecogs/finance/banking/interesteffective.h>
 
int main()
{
  int i;
  float f = 4.25;

  printf("      Rate    NPery   Effective\n");
  for (i=3;i<10;++i)
  {
    printf("    %f      %d      %f\n",f,i,Finance::Banking::interestEffective(f,i));
    ++f;
  }
  return 0;
}

Output

Rate          NPery     Effective
 4.250000        3       0.043105
 5.250000        4       0.053542
 6.250000        5       0.064083
 7.250000        6       0.074726
 8.250000        7       0.085475
 9.250000        8       0.096331
 10.250000       9       0.107296

If less than or equal to 0, effect will return -1

Note:

It is assumed that no withdrawls are made on the sum.

James Warren (August 2005)

Parameters:

rate	is the nominal interest rate, expressed as a double type.

Authors:

Alwyn Tan (Mar 2005)