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effrr

Effective rate of return

Syntax

Return = effrr(Rate, NumPeriods)

Arguments

Rate

Annual percentage rate. Enter as a decimal fraction.

NumPeriods

Number of compounding periods per year, an integer.

Description

Return = effrr(Rate, NumPeriods) calculates the annual effective rate of return. Compounding continuously returns Return equivalent to (e^Rate-1).

Examples

expand all

Compute the Annual Effective Rate of Return

This example shows how to find the effective annual rate of return based on an annual percentage rate of 9% compounded monthly.

Return = effrr(0.09, 12)
Return =

    0.0938

See Also

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