interest Effective

Interface

InterestEffective

This function computes the effective annual interest rate, based on the nominal interest rate and the number of compounding periods per year.

It is based on the following equation, where

• rate is the nominal interest rate, and
• npery is the number of compounding periods per year,

expressed as an integer.

Example 1

#include <stdio.h>
#include <codecogs/finance/banking/interesteffective.h>
 
int main()
{
  int i;
  float f = 4.25;

  printf("      Rate    NPery   Effective\n");
  for (i=3;i<10;++i)
  {
    printf("    %f      %d      %f\n",f,i,Finance::Banking::interestEffective(f,i));
    ++f;
  }
  return 0;
}

Output

Rate          NPery     Effective
 4.250000        3       0.043105
 5.250000        4       0.053542
 6.250000        5       0.064083
 7.250000        6       0.074726
 8.250000        7       0.085475
 9.250000        8       0.096331
 10.250000       9       0.107296

If less than or equal to 0, effect will return -1

Note

It is assumed that no withdrawls are made on the sum.

James Warren (August 2005)

Parameters

rate	is the nominal interest rate, expressed as a double type.

Authors

Alwyn Tan (Mar 2005)

Source Code

Source code is available when you agree to a GP Licence or buy a Commercial Licence.

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