## EFFECT Function

The EFFECT function in Google Sheets calculates the effective annual interest rate given a nominal interest rate and the number of compounding periods per year.

### Syntax

```
EFFECT(nominal_rate, periods_per_year)
```

`nominal_rate`

: The nominal interest rate per year. This is a required parameter.`periods_per_year`

: The number of compounding periods per year. This is a required parameter.

### Examples

**Calculate Effective Annual Rate**

Calculate the effective annual interest rate for a nominal rate of 5% compounded quarterly:

```
=EFFECT(0.05, 4)
```

This will output 5.0945%.

### Notes

- The EFFECT function is particularly useful for comparing interest rates with different compounding periods.
- Ensure that the nominal rate and periods per year are consistent with the financial product being evaluated.

### Related Functions

- NOMINAL: Calculate the nominal interest rate given the effective rate and the number of compounding periods.