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NOMINAL Function

Excel 2007+

Summary

The Excel NOMINAL function converts an effective annual interest rate into its equivalent nominal annual interest rate based on a specified number of compounding periods per year. This is essential for financial analysis comparing rates across different compounding frequencies.

Syntax

NOMINAL(effect_rate, npery)

Parameters

Parameter	Type	Required	Description
effect_rate	`Number`	Yes	Effective annual interest rate as a decimal (e.g., 5.3543% = 0.053543)
npery	`Number`	Yes	Number of compounding periods per year (e.g., 12 for monthly, 4 for quarterly)

Using the NOMINAL Function

NOMINAL is used in financial modeling to convert effective rates (APR) to nominal rates (APY) for comparison across different compounding schedules. It's particularly useful when analyzing loans, investments, or bonds with varying compounding frequencies.

Common NOMINAL Examples

Quarterly Compounding Example

=NOMINAL(0.053543,4)

Converts 5.3543% effective rate with quarterly compounding to nominal rate. Returns approximately 5.25%.

Monthly Compounding Example

=NOMINAL(0.065,12)

Converts 6.5% effective rate with monthly compounding to nominal rate of approximately 6.17%.

Daily Compounding Example

=NOMINAL(0.05,365)

Converts 5% effective rate with daily compounding to nominal rate.

Frequently Asked Questions

NOMINAL converts effective rate TO nominal rate. EFFECT converts nominal rate TO effective rate. They are inverse functions.

No, NOMINAL requires a specific number of discrete compounding periods per year.

Common Errors and Solutions

#VALUE! error

Cause: Either effect_rate or npery contains non-numeric values

Solution: Ensure both arguments are valid numbers

#NUM! error

Cause: effect_rate ≤ 0 or npery < 1

Solution: Use positive effective rate and compounding periods ≥ 1

Notes

Npery is automatically truncated to an integer
NOMINAL(effective_rate,npery) relates to EFFECT through: effective_rate = (1 + (nominal_rate/npery))^npery - 1
Common npery values: 1=annual, 2=semi-annual, 4=quarterly, 12=monthly, 365=daily

Compatibility

Available in: Excel 2007, Excel 2010, Excel 2013, Excel 2016, Excel 2019, Excel 2021, Microsoft 365

Not available in: Excel 2003 and earlier

Content last reviewed: December 9, 2025
Update frequency: As needed
Excel versions tested: Excel 2007+