Excel functions

How to Use the NOMINAL Function in Excel

Welcome to our discussion on the NOMINAL function, available in both Excel and Google Sheets. This function is essential for calculating the nominal annual interest rate from the effective interest rate and the number of compounding periods per year. We will explore how to apply this function effectively in your spreadsheet tasks.

Function Overview

The NOMINAL function follows the same syntax in both Excel and Google Sheets:

=NOMINAL(effect_rate, npery)
  • effect_rate: This is the effective interest rate per period.
  • npery: This represents the number of compounding periods per year.

Practical Applications

The NOMINAL function is particularly useful in various financial calculations, such as:

  1. Calculating the nominal interest rate for loans with monthly compounding.
  2. Figuring out the annual interest rate for investments with quarterly compounding.

Using the NOMINAL function in Excel and Google Sheets

Let’s walk through an example to demonstrate how to use the NOMINAL function to determine the nominal interest rate.

Excel Example

Suppose you have a loan with an effective monthly interest rate of 5%. To calculate the nominal annual interest rate with monthly compounding, you would set up your worksheet as follows:

Effective Rate Compounding Periods Nominal Rate
5% 12 =NOMINAL(0.05, 12)

The formula =NOMINAL(0.05, 12) calculates the nominal annual interest rate based on these inputs.

Google Sheets Example

The procedure in Google Sheets is identical to Excel. Using the same data, enter the formula in a cell to compute the nominal rate:

Effective Rate Compounding Periods Nominal Rate
5% 12 =NOMINAL(0.05, 12)

This formula will yield the same result in Google Sheets as it does in Excel.

By following these steps, you can now effectively implement the NOMINAL function in both Excel and Google Sheets to enhance your financial analysis and decision-making.

More information: https://support.microsoft.com/en-us/office/nominal-function-7f1ae29b-6b92-435e-b950-ad8b190ddd2b

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ACCRINT
Returns the accrued interest for a security that pays periodic interest
ACCRINTM
Returns the accrued interest for a security that pays interest at maturity
AMORDEGRC
Returns the depreciation for each accounting period by using a depreciation coefficient
AMORLINC
Returns the depreciation for each accounting period
COUPDAYBS
Returns the number of days from the beginning of the coupon period to the settlement date
COUPDAYS
Returns the number of days in the coupon period that contains the settlement date
COUPDAYSNC
Returns the number of days from the settlement date to the next coupon date
COUPNCD
Returns the next coupon date after the settlement date
COUPNUM
Returns the number of coupons payable between the settlement date and maturity date
COUPPCD
Returns the previous coupon date before the settlement date
CUMIPMT
Returns the cumulative interest paid between two periods
CUMPRINC
Returns the cumulative principal paid on a loan between two periods
DB
Returns the depreciation of an asset for a specified period by using the fixed-declining balance method
DDB
Returns the depreciation of an asset for a specified period by using the double-declining balance method or some other method that you specify
DISC
Returns the discount rate for a security
DOLLARDE
Converts a dollar price, expressed as a fraction, into a dollar price, expressed as a decimal number
DOLLARFR
Converts a dollar price, expressed as a decimal number, into a dollar price, expressed as a fraction
DURATION
Returns the annual duration of a security with periodic interest payments
EFFECT
Returns the effective annual interest rate
FV
Returns the future value of an investment
FVSCHEDULE
Returns the future value of an initial principal after applying a series of compound interest rates
INTRATE
Returns the interest rate for a fully invested security
IPMT
Returns the interest payment for an investment for a given period
IRR
Returns the internal rate of return for a series of cash flows
ISPMT
Calculates the interest paid during a specific period of an investment
MDURATION
Returns the Macauley modified duration for a security with an assumed par value of $100
MIRR
Returns the internal rate of return where positive and negative cash flows are financed at different rates
NPER
Returns the number of periods for an investment
NPV
Returns the net present value of an investment based on a series of periodic cash flows and a discount rate
ODDFPRICE
Returns the price per $100 face value of a security with an odd first period
ODDFYIELD
Returns the yield of a security with an odd first period
ODDLPRICE
Returns the price per $100 face value of a security with an odd last period
ODDLYIELD
Returns the yield of a security with an odd last period
PDURATION
Returns the number of periods required by an investment to reach a specified value
PMT
Returns the periodic payment for an annuity
PPMT
Returns the payment on the principal for an investment for a given period
PRICE
Returns the price per $100 face value of a security that pays periodic interest
PRICEDISC
Returns the price per $100 face value of a discounted security
PRICEMAT
Returns the price per $100 face value of a security that pays interest at maturity
PV
Returns the present value of an investment
RATE
Returns the interest rate per period of an annuity
RECEIVED
Returns the amount received at maturity for a fully invested security
RRI
Returns an equivalent interest rate for the growth of an investment
SLN
Returns the straight-line depreciation of an asset for one period
SYD
Returns the sum-of-years' digits depreciation of an asset for a specified period
TBILLEQ
Returns the bond-equivalent yield for a Treasury bill
TBILLPRICE
Returns the price per $100 face value for a Treasury bill
TBILLYIELD
Returns the yield for a Treasury bill
VDB
Returns the depreciation of an asset for a specified or partial period by using a declining balance method
XIRR
Returns the internal rate of return for a schedule of cash flows that is not necessarily periodic
XNPV
Returns the net present value for a schedule of cash flows that is not necessarily periodic
YIELD
Returns the yield on a security that pays periodic interest
YIELDDISC
Returns the annual yield for a discounted security; for example, a Treasury bill
YIELDMAT
Returns the annual yield of a security that pays interest at maturity