How to Use Excel EFFECT Function?

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Excel EFFECT Function: Excel is a spreadsheet program that is developed for Windows, Mac, Android, and iOS. It helps to perform calculations on your PC. The purpose of this software is to do complicated calculations which are difficult to do manually. With the help of this spreadsheet program, you can insert, organize, maintain, manage, and calculate data.

This blog post describes the description, basic syntax, and usage of the Excel EFFECT function. Get an official version of Microsoft Excel from the following link:

https://www.microsoft.com/en-in/microsoft-365/excel

Description of EFFECT Function

It is one of the built-in functions in Microsoft Excel.
The Excel EFFECT function calculates the effective annual interest rate for a specified nominal interest rate and the number of compounding periods for each year.

Syntax

Here, you will see the syntax of the EFFECT function.
To apply this function on your spreadsheet, you have to select a cell and enter the formula in the following format.
Once you enter the formula, just click on the Enter button to get the result.

=EFFECT(nominal_rate, npery)

Argument Description:

Nominal_rate (Required) – The nominal interest rate must be a numeric value between 0 and 1.
Npery (Required) – It is the number of compounding periods per year. It must be an integer.

Note:
1) The function returns the #VALUE! Error if any one of the input arguments contains a non-numeric character.
2) The #NUM! error occurs if the given ‘nominal_rate’ argument is less than or equal to 0 or the supplied ‘npery’ argument is less than 1.

Examples

Refer to the below examples of the EFFECT function and explore how to use it in Excel.

Initially, you have to open your Excel workbook on your PC and launch a worksheet that has data.
For example, we have given a Nominal interest rate in column B and the period values in Column C. We will get the effective annual interest rate using the Effect function.

Then, you have to enter the formula in the cell as shown below to get the result.

After entering the formula, you need to click the Enter button to get the output, as shown below. You can drag down the cell to fill the remaining cells.

Input that Causes Error

The #NUM! error occurs if either the given ‘nominal_rate’ argument is less than or equal to 0 or the supplied ‘npery’ argument is less than 1.
The #VALUE! error will be returned if any one of the input arguments contains a non-numeric character.

Verdict

The above article described the explanation, basic syntax, and usage of the Excel EFFECT function with examples. Use the function to evaluate the effective annual interest rate for the given inputs, nominal_rate, and periods.

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