Effective Rate Calculator

Effective Rate Calculator Guide

The Effective Rate Calculator allows you to determine the Effective Annual Rate (EAR) and the amount of interest earned over one year, as well as the final amount of your investment. Here’s how to use it:

Step 1: Input the Nominal Interest Rate

• Locate the input field labeled Nominal Interest Rate (%).
• Enter the nominal interest rate that you want to calculate. Input between 0.01 and 100 is allowed, with increments of 0.01.

Step 2: Choose the Compounding Frequency

• Find the selection box labeled Compounding Frequency.
• Select how often the interest will be compounded from the provided options: Annually, Semi-annually, Quarterly, Monthly, or Daily.

Step 3: Enter the Principal Amount

• Go to the input field labeled Principal Amount.
• Type in the initial amount of money you are planning to invest. This must be a number greater than 1.

Step 4: View the Results

• After entering all the necessary inputs, the calculator will provide the following results:
• Effective Annual Rate (EAR): This value represents the effective rate express in percentage terms to two decimal places.
• Interest Earned (1 Year): This is the amount of interest you’d earn in one year, formatted in US dollars to two decimal places.
• Final Amount (After 1 Year): The total value of your investment after one year, shown in US dollars to two decimal places.