Excel Formulas to Calculate the Effective Annual Interest Rate!!
Tags: excelformula, excelformulas
Published: 2021-06-30 01:55:57

---
title: Excel Formulas to Calculate the Effective Annual Interest Rate!!
published: true
date: 2021-06-23 14:22:25 UTC
tags: ExcelFormula,Excelformulas
canonical_url: https://geekexcel.com/excel-formulas-to-calculate-the-effective-annual-interest-rate/
---

The **Effective Annual Interest Rate (EAR)** is the interest rate that is adjusted for compounding over a given period.  In this blog post, we will show the formulas to **calculate the effective annual interest in Excel**. Let’s jump into this article!! Get an official version of ** MS Excel**  from the following link: [https://www.microsoft.com/en-in/microsoft-365/excel](https://www.microsoft.com/en-in/microsoft-365/excel)

[!["Calculate](https://geekexcel.com/wp-content/uploads/2021/06/Calculate-the-Effective-Annual-Interest-Rate.png)](https://geekexcel.com/excel-formulas-to-calculate-the-effective-annual-interest-rate/calculate-the-effective-annual-interest-rate/#main)

## Generic Formula:

- Use the below formula to calculate the effective annual interest rate in Excel.

**=[EFFECT](https://geekexcel.com/usage-of-excel-effect-function-in-office-365-with-examples/)(rate,periods)**

## Syntax Explanations:

- **EFFECT** – In Excel, the **[EFFECT function](https://geekexcel.com/usage-of-excel-effect-function-in-office-365-with-examples/)** helps to calculate the effective annual interest rate for a specified nominal interest rate and the number of compounding periods for each year.
- **Rate** – It represents the interest rate.
- **Periods** – It represents the loan periods.
- **Comma symbol (,)** – It is a separator that helps to separate a list of values.
- **Parenthesis ()** – The main purpose of this symbol is to group the elements.

## Practical Example:

Let’s consider the below example image.

- Here, we will enter the input values in **Column B**.
- Now, we are going to find out the effective annual interest rate.

![Input Ranges](https://geekexcel.com/wp-content/uploads/2021/06/Input-Ranges-63.png)<figcaption id="caption-attachment-47857">Input Ranges</figcaption>

- Select any cell and apply the above-given formula.

![Enter the formula](https://geekexcel.com/wp-content/uploads/2021/06/Enter-the-formula-77.png)<figcaption id="caption-attachment-47856">Enter the formula</figcaption>

- Finally, press the ** ENTER**  key, you can get the result as shown below.

![Result](https://geekexcel.com/wp-content/uploads/2021/06/Result-64.png)<figcaption id="caption-attachment-47858">Result</figcaption>

## Closure:

In this chapter, we have described the formulas to **calculate the (EAI) in Excel**. If you are stuck or need some help, **comment** below, and I will try to help as much as possible.

Thank you so much for visiting  **[Geek Excel](https://geekexcel.com/)!! **If you want to learn more helpful formulas, check out [**Excel Formulas**](https://geekexcel.com/excel-formula/) **!! **

### Read Ahead:

- **[Excel Formulas to Calculate the Simple Interest ~ A Complete Guide!!](https://geekexcel.com/excel-formulas-to-calculate-the-simple-interest/)**
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- **[Excel Formulas to Calculate an Estimated Mortgage Payment!!](https://geekexcel.com/excel-formulas-to-calculate-an-estimated-mortgage-payment/)**
- **[Excel Formulas to Calculate the Payment for a Loan ~ Useful Tricks!!](https://geekexcel.com/excel-formulas-to-calculate-the-payment-for-a-loan/)**