# Documentation/Calc Functions/EFFECT ADD

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EFFECT_ADD

## Category:

Financial Analysis

## Summary:

Calculates the effective(net) annual rate of interest on the basis of the nominal interest rate and the number of interest payments per annum.

Nominal interest refers to the amount of interest due at the end of a calculation period. Effective interest increases with the number of payments made. In other words, interest is often paid in installments (for example, monthly or quarterly) before the end of the calculation period.

## Syntax:

EFFECT_ADD(NominalRate; NPerY)

## Returns:

Returns a non-negative real number(expressed as a percentage) which is the effective annual interest rate where the nominal interest rate is NominalRate and the number of compounding periods per year is NPerY.

## Arguments:

NominalRate is either a non-negative real number (expressed as a percentage or a fraction) or a reference to the cell containing that number which is the nominal interest rate.

NPerY is a positive integer value or a reference to the cell containing that number which is the number of interest payment periods per year.

• If NominalRate is less than 0 then the function returns an error value.
• If NPerY is not an integer value, then it is truncated to an integer.
• If after truncation NPerY is less than 1 then the function returns an error value.

## Additional details:

• The formula for EFFECT_ADD is:

where Rate is NominalRate and Payments is NPerY. The functions whose names end with _ADD or _EXCEL2003 return the same results as the corresponding Microsoft Excel 2003 functions without the suffix. Use the functions without suffix to get results based on international standards.

## Examples:

Formula Description Returns
=EFFECT_ADD(9.75%;4) If the annual nominal interest rate is 9.75% and four interest calculation periods are defined, then the function finds what is the actual interest rate (effective rate). 0.10112312546402 or 10.11%
=EFFECT_ADD(0.55;2) If the annual nominal interest rate is 55% and two interest calculation periods are defined, then the function finds what is the actual interest rate (effective rate). 0.625625 or 62.56%
=EFFECT_ADD(0;100) If the annual nominal interest rate is 0% and hundred interest calculation periods are defined, then the function finds what is the actual interest rate (effective rate). 0.00 or 0.00%
=EFFECT_ADD(500%;100) If the annual nominal interest rate is 500% and hundred interest calculation periods are defined, then the function finds what is the actual interest rate (effective rate). 130.501257846304 or 13050.13%
=EFFECT_ADD(0.5;0.9) The function returns an error value since P is less than 1. Err:502

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