Formula generator for NOMINAL function
The NOMINAL function in Excel is used to calculate the annual nominal interest rate given the effective rate and the number of compounding periods per year. It is commonly used in financial calculations to convert the effective interest rate to the nominal interest rate.
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How to generate an NOMINAL formula using AI.
To obtain information on the ARRAY_CONSTRAIN formula, you could ask the AI chatbot the following question: “To obtain the NOMINAL formula, you can ask the AI chatbot the following question: "What is the formula for calculating the nominal interest rate in Excel?"”
NOMINAL formula syntax
The NOMINAL function in Excel calculates the nominal annual interest rate based on the effective annual interest rate and the number of compounding periods per year. The syntax for the NOMINAL function is: NOMINAL(effect_rate, npery) - effect_rate: This is the effective annual interest rate. - npery: This is the number of compounding periods per year. The NOMINAL function returns the nominal annual interest rate as a decimal. It is commonly used in financial calculations to convert the effective interest rate to the nominal interest rate for comparison or further analysis.
Use Cases & Examples
In these use cases, we use the NOMINAL function to calculate the nominal interest rate given the effective interest rate and the number of compounding periods per year.
Calculating Annual Nominal Interest Rate
Description
Calculates the annual nominal interest rate given the effective rate and number of compounding periods per year.
Result
NOMINAL(effective_rate, periods_per_year)
Calculating Total Loan Repayment
Description
Calculates the total repayment amount for a loan given the principal amount, annual interest rate, and loan term in years.
Result
PMT(interest_rate, loan_term, -principal_amount)
Calculating Compound Interest
Description
Calculates the compound interest earned on an investment given the principal amount, annual interest rate, and number of compounding periods per year.
Result
principal_amount * (1 + interest_rate/compounding_periods_per_year)^(compounding_periods_per_year * investment_term) - principal_amount
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FAQ
Frequently Asked Questions
- The NOMINAL function in Excel is used to calculate the nominal interest rate per period given the effective interest rate per period and the number of compounding periods per year.
- To use the NOMINAL function in Excel, you need to provide the effective interest rate per period and the number of compounding periods per year as arguments. The formula syntax is: =NOMINAL(effect_rate, npery)
- The NOMINAL function in Excel assumes that interest is compounded annually. It may not be suitable for certain financial calculations that involve different compounding periods.
- No, the NOMINAL function calculates the nominal interest rate from the effective interest rate. To calculate the effective interest rate, you can use the EFFECT function.
- Yes, you can use the RATE function in Excel to calculate the nominal interest rate per period.