NOMINAL
TheNOMINAL
function calculates the nominal annual interest rate given the effective rate and the number of compounding periods per year. This function is commonly used in financial calculations to convert the effective interest rate to the nominal interest rate.
 How to use
NOMINAL
formula?  Examples of using
NOMINAL
formula NOMINAL
formula not working? Similar formulas to
NOMINAL
Usage
Use the NOMINAL
formula with the syntax shown below, it has 2 required parameters:
 effective_rate (required):
The effective annual interest rate.  periods_per_year (required):
The number of compounding periods per year. Must be an integer.
Examples
Here are a few example use cases that explain how to use theNOMINAL
formula in Google Sheets.
Calculating nominal interest rate
Suppose you have a loan with an effective annual interest rate of 6% and interest is compounded monthly. You can use the NOMINAL
function to calculate the nominal annual interest rate as follows: =NOMINAL(6%, 12)
.
Comparing interest rates
Different loans may have different compounding periods, making it difficult to compare their interest rates. The NOMINAL
function can be used to convert effective annual interest rates to nominal annual interest rates with the same compounding frequency so that they can be easily compared.
Investment returns
The NOMINAL
function can also be used to calculate the nominal rate of return on an investment given the effective rate and the number of compounding periods per year.
Common Mistakes
NOMINAL
not working? Here are some common mistakes people make when using the NOMINAL
Google Sheets Formula:
Incorrect order of arguments
The effective_rate argument should come before the periods_per_year argument in the NOMINAL formula. Doublecheck the order of your arguments and switch them if necessary.
Using an annual interest rate instead of an effective interest rate
Make sure that the effective_rate argument in the NOMINAL formula is the effective interest rate per period, not the annual interest rate. If you only have the annual interest rate, you'll need to convert it to an effective interest rate per period before using it in the formula.
Using the wrong number of periods per year
The periods_per_year argument in the NOMINAL formula should be the number of compounding periods per year. Make sure you're using the correct number of periods based on the frequency of compounding (e.g. 12 for monthly, 4 for quarterly, etc.).
Using nonnumeric arguments
Both the effective_rate and periods_per_year arguments in the NOMINAL formula should be numeric values. Doublecheck that you're not using any text or other nonnumeric data in these arguments.
Not formatting the result as a percentage
The result of the NOMINAL formula is a decimal value that represents the nominal annual interest rate. Make sure to format the result as a percentage using the % symbol or the 'Percent' number format to make the value easier to read.
Related Formulas
The following functions are similar to NOMINAL
or are often used with it in a formula:

EFFECT
The
EFFECT
function calculates the effective annual interest rate based on the nominal annual interest rate and the number of compounding periods per year. It is commonly used in financial calculations to determine the true cost of borrowing or the real rate of return on an investment. 
FV
The
FV
function calculates the future value of an investment based on periodic constant payments and a constant interest rate. It takes into account the present value of the investment, the number of periods in which the payments are made, and the compounding frequency. This formula is commonly used in financial planning and investment analysis. 
PV
The
PV
function in Google Sheets calculates the present value of a regular payment stream or a lump sum amount, based on a constant interest rate. It is commonly used in financial analysis to determine the value of investments or loans. This function returns a negative value, as it represents money flowing out from the user. 
RATE
The
RATE
formula returns the interest rate per period of an annuity. This formula is often used in financial analyses to calculate the rate of return on an investment. It assumes that payments are made at regular intervals and that the interest rate remains constant throughout the duration of the annuity. 
NPER
The
NPER
function calculates the total number of payment periods required to pay off an investment based on a constant payment amount, a fixed interest rate, and the present value of the investment. It is commonly used in financial planning and investment analysis.
Learn More
You can learn more about the NOMINAL
Google Sheets function on Google Support.