By taking the time to learn and master these Excel functions, you’ll significantly speed up your financial analysis.On the Home tab, select Number from the drop-down. Thanks for reading CFI’s guide to this important Excel function. The relationship between the NOMINAL and EFFECT functions can be understood by the following formula:Ĭlick here to download the sample Excel file Additional Resources

The NOMINAL rate is related to the EFFECTIVE rate.

The NOMINAL function will return a VALUE! error if any of the given arguments is non-numeric.

The given effect_rate is less than or equal to zero.

Remember that npery gets truncated to an integer.

The results after formatting will look like this: Select the CTRL key and while holding this down, press the “1” (one) key).

Use the keyboard shortcut CTRL-1 (i.e.

Use the Dialog Box launcher in the Number group of the Excel Ribbon or.

Right-click on the selected cell or range and select the Format Cells -> Option from the right-click menu or.

Another method is to open the ‘Format Cells’ dialog box using any one of the following methods:.

Click on the % icon in the Home tab under Number.

First, select the cell(s) to be formatted as a percentage.

It can be fixed by formatting the cell as a percentage with decimal places. The problem occurs due to the formatting of the cell containing the NOMINAL function. The result is displayed as a decimal as seen above or it shows 0%. The formula to be used would be =NOMINAL(effect_rate,npery).

Let’s assume we need to choose from three loans to calculate the nominal interest rate with different terms. To understand the uses of the NOMINAL function, let’s consider an example: Example 1 How to use the NOMINAL Function in Excel?

Npery (required argument) – This is the number of compounding periods.Effect_rate (required argument) – This is the effective interest rate.The NOMINAL function uses the following arguments: If two bonds are to be compared, one advertising a real interest rate while the other a nominal rate, the NOMINAL function can be helpful. In financial analysis, we often evaluate more than one bond and hence are interested in knowing the net return offered by each. The function will return the nominal annual interest rate when the effective rate and number of compounding years are given. The NOMINAL Function is categorized under Excel Financial functions.

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