Chancellors Formula Calculator

Chancellors Formula Calculator calculator can be used to calculate the effective interest rate based on the nominal interest rate and the number of compounding periods per year.

Input Parameters

Calculation Results

Calculation Formula

Effective Interest Rate (i) = (1 + (r/n))^n - 1

Where:
r = Nominal Interest Rate
n = Number of Compounding Periods per Year

Effective Interest Rate

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Chancellors Formula Calculator Calculator Usage Guide

Learn how to use the Chancellors Formula Calculator calculator and its working principles

How to Use the Calculator

  1. Enter the nominal interest rate as a percentage (e.g., 5 for 5%).
  2. Enter the number of compounding periods per year (e.g., 12 for monthly compounding).
  3. Click the "Calculate" button to compute the effective interest rate.
  4. The result will be displayed as a percentage.

Understanding the Formula

The Chancellors Formula (or Effective Interest Rate Formula) is used to determine the actual interest rate that will be paid on a loan or realized on an investment based on the nominal interest rate and the compounding frequency.

The formula is: Effective Interest Rate (i) = (1 + (r/n))^n - 1

Where:

  • r = Nominal Interest Rate
  • n = Number of Compounding Periods per Year

This formula helps in comparing different financial products that may have different compounding periods.