Take Compounding Interest quiz
Effective Interest Rate is used to compare the interest rates between loans with different periods , such as per period , for t Period , for Compounding Period .
Effective Interest Rate per Period:
i = (1 + r / m)m - 1
Where
i = Effective Interest Rate in decimal form
I = Effective Interest Rate in percent
m = Compounding Periods
R = Rate of interest per period in percent
r = Interest Rate in decimal form
Effective Interest Rate for t Periods:
it = (1 + i)t - 1
Where
i = Effective Interest Rate in decimal form
t = Time Periods
Effective Interest Rate per Compounding Period:
P = R / m
Where
m = Compounding Periods
R = Rate of Interest per Period in Percent