Enter the nominal annual rate and choose a compounding frequency, up to continuous. The calculator shows the effective annual rate (APY) for true comparison.
The EAR, or APY, is the true annual return once compounding is included. It is always at least the nominal rate and higher when compounding is more frequent.
EAR = (1 + i/n)^n − 1, where i is the nominal annual rate and n the number of compounding periods per year. For continuous compounding, EAR = e^i − 1.
Two loans or deposits with the same nominal rate can differ if one compounds monthly and another yearly. EAR normalizes them so you compare true annual cost or yield.
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