NOMINAL
The NOMINAL function in Google Sheets is a financial tool that calculates the annual nominal interest rate based on the effective rate and the number of compounding periods per year. This function is useful for various financial calculations and analysis. Learn how to use the NOMINAL function effectively with our comprehensive guide.
Function Syntax and Parameters
Syntax: NOMINAL(effective_rate, periods_per_year)
Parameters:
effective_rate: The effective interest rate per compounding period.periods_per_year: The number of compounding periods per year.
Step-by-Step Tutorial
Here is an example of how to use the NOMINAL function:
=NOMINAL(0.08, 12)
In this example, the effective rate is 8% (0.08) and the number of compounding periods per year is 12. The NOMINAL function will calculate the annual nominal interest rate based on these inputs.
Use Cases and Scenarios
Here are some common use cases for the NOMINAL function:
- Investment Analysis: Calculate the annual nominal interest rate based on the effective rate for investment evaluation.
- Loan Comparison: Determine the annual nominal interest rate for different loan options to compare their costs.
- Financial Planning: Estimate the annual nominal interest rate to forecast future financial outcomes.
Related Functions
EFFECTIVE: Converts the nominal interest rate to the effective rate.