interestEffective — Banking

Finance namespace

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Interface

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

using namespace Finance::Banking;

double interestEffective(double rate, int npery)

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,

$$\left ( 1 + \frac{rate}{npery} \right ) ^ {npery} - 1$$

(1)

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

Parameters

rate

is the nominal interest rate, expressed as a percentage (e.g. 4.25 for 4.25%).

Blank

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

Parameters

npery

is the number of compounding periods per year, expressed as an integer.

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

Blank

James Warren (August 2005)

Interactive Calculator

rate

npery

Result –