That period is one year in this case. These are the formula and calculations: Investment B has a higher stated nominal interest rate but the effective annual interest rate is lower than the ...

But if you like a challenge, here we go. Here's the effective interest rate formula: 1 + (nominal interest rate / number of compounding periods)) ^ (number of compounding periods) – 1 Wait!

That’s because the effective interest rate also considers the effect of compounding. We’ll provide the formula later in the article. Currently, all financial institutions in Singapore are required by ...