Formulas > =NOMINAL()

# How To Use NOMINAL() Function in Google Sheets

Description

Calculates the annual nominal interest rate given the effective rate and number of compounding periods per year.

Common Questions about the NOMINAL Formula:
• What does the NOMINAL Formula do in Google Sheets?
• How can NOMINAL Function be used to calculate nominal interest rate?
• What is the syntax of the NOMINAL Formula?

How can the NOMINAL Formula be used appropriately:
• Calculate the effective annual yield from a nominal interest rate
• Calculate the effective rate when given a nominal interest rate
• Calculate future value of investments

How can the NOMINAL Formula be commonly mistyped:
• The NOMINAL formula is often confused with the EFFECTIVE function and mistyped as EFFECTIVE instead of NOMINAL
• Some users may mistake the Function Arguments (rate, nper, pmt, fv)
• Some common mistypes are NMINAL, NOMNAL, NOMINL.

What are some common ways the NOMINAL Formula is used inappropriately:
• Trying to use the formula to calculate the nominal interest rate from an effective rate
• Trying to use the formula to calculate the future value of a present investment

What are some common pitfalls when using the NOMINAL Formula:
• Carelessly mistyping the function or mixing the arguments up
• Not initializing the function properly
• Not fully understanding the effects of the periodic payment, number of payments, and future value on the calculation

What are common mistakes when using the NOMINAL Formula:
• Not setting the parameters correctly
• Not understanding the effects of base rate, compounding, and number of payments on the calculation
• Not understanding the relationship between nominal and effective interest rate

What are common misconceptions people might have with the NOMINAL Formula:
• The NOMINAL formula is not the same as the EFFECTIVE function
• The NOMINAL formula does not calculate the compound interest rate
• The NOMINAL formula cannot calculate the present value of an investment

How To Actually Use NOMINAL() in Sheets

NOMINAL(effective_rate, periods_per_year)

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Use the Google Sheets NOMINAL function to get the nominal interest rate or the stated interest rate for an investment or a loan. The effective interest rate, in contrast to the nominal rate, is the actual rate of interest. The nominal interest rate does not consider interest compounding. For this reason, such a rate is typically lower than the effective rate.

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