EAR Calculator

The EAR calculator, or effective annual rate calculator.  computing the effective annual rate(%) of an investment or a loan.Effective annual rate  Calculator equal to number value 1 added to annual interest rate(r) divided to compounding periods (m) less than number of value 1.

Formula as,

EAR = (1 + r / m)ᵐ − 1

let us consider,

• EAR– the effective annual interest rate, or effective rate.
• r– the annual interest rate.
• m– compounding periods,  the number of times compounding occurs in a year, or, in other words.

Example

1. Take an auto loan with an annual rate of 11%, compounded monthly.
2. Debit your credit card that charges 1% per month, compounded daily.

EAR = (1 + r / m)ᵐ − 1

EAR = (1 + 0.11 / 11)12− 1

The answer is Effective annual rate  = 11.5719%

Periodic Rate is = 0.91667%

Let us consider

• Annual interest rate – the nominal interest in a year;
• Periodic rate – the charged rate by a lender or paid by a borrower each period. The effective annual rate calculator.
• Compounding frequency – the number of times compounding occurs in a year.
• Effective Annual Rate (EAR).