Finance[effectiverate]  convert a stated rate to the effective rate

Calling Sequence


effectiverate(stated_rate, nperiods)


Parameters


stated_rate



interest rate, expressed as a decimal number

nperiods



number of times the rate is compounded in the period





Description


•

Continuous compounding is indicated by specifying infinity as the number of compounding periods.

•

Since effectiverate used to be part of the (now deprecated) finance package, for compatibility with older worksheets, this command can also be called using finance[effectiverate]. However, it is recommended that you use the superseding package name, Finance, instead: Finance[effectiverate].



Compatibility


•

The Finance[effectiverate] command was introduced in Maple 15.



Examples


A given loan is at 12% compounded monthly. The effective rate is then 1% monthly compounded 12 times. One can calculate it as follows:
>

$\mathrm{with}\left(\mathrm{Finance}\right)\:$

>

$\mathrm{effectiverate}\left(0.12\,12\right)$

or about 12.7%. This can also be seen as:
>

${\left(1\+\frac{0.12}{12}\right)}^{12}1$

Compounded continuously, the effective rate is:
>

$\mathrm{effectiverate}\left(0.12\,\mathrm{\∞}\right)$



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