The Excel NOMINAL Function

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Related Function :

EFFECT Function

Basic Description

The Excel NOMINAL function returns the nominal interest rate for a given effective interest rate and number of compounding periods per year.

The format of the function is :

NOMINAL( effect_rate, npery )

where the arguments are as follows:

effect_rate	-	The effective interest rate (a numerical value, between 0 and 1)
npery	-	The number of compounding periods per year (must be a positive integer)

Examples

The following spreadsheet shows examples of the Excel Nominal function being used to calculate the nominal interest rate of loans with different terms. The spreadsheet on the left shows the format of the function, and the spreadsheet on the right shows the results.

Formulas:

Example of use of the Excel Nominal Function

Results:

Further examples of the Excel Nominal function can be found on the Microsoft Office website.

Trouble Shooting

If you get an error from the Excel Nominal function this is likely to be one of the following :

Common Errors

#NUM!

Occurs if the supplied effect_int argument is ≤ 0 or the supplied npery argument is < 1

#VALUE!

Occurs if either of the supplied arguments cannot be recognised as a number by Excel

#NAME?

Occurs when Analysis ToolPak add-in is not enabled in your Excel.

To enable this add-in in Excel 2003 :

From the Tools drop-down menu, select the option Add-Ins ...
An 'Add-Ins' window will pop up. From this, select the option Analysis ToolPak and click OK

To enable this add-in in Excel 2007 :

Click the Microsoft button on the top left of your spreadsheet and select the Excel Options button
From the menu on the left hand side, select Add-Ins
In the 'Manage:' box, select Excel Add-ins and click Go...
An 'Add-Ins' window will pop up. From this, select the option Analysis ToolPak and click OK

Also, the following problem is encountered by some users:

Common Problem

The result from the Nominal function is presented as a decimal, or shows 0%.

Possible Reason

Both of these problems are likely to be due to the formatting of the cell containing the function.

Therefore the problem can be fixed by formatting the cell as a percentage, with decimal places :

Use the mouse to right click on the cell containing the function
Select the Format Cells ... option and ensure the Number tab is selected
Under the Category heading, make sure the option Percentage is selected, and in the box to the right (entitled Decimal Places), change the value to 2 (or more).
Click OK