Effective Yield Calculator

✖Nominal Rate refers to the interest rate before taking inflation into account.ⓘ Nominal Rate [NR]			+10% -10%
✖Number of Payments Per Year is the count on the paymenst made for the interest on bond in a particular year.ⓘ Number of Payments Per Year [n_PYr]			+10% -10%

✖Effective Yield refers to the yield of a bond where the bondholder reinvests its interest payments, or coupons, at the same rate.ⓘ Effective Yield [i]

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Formula

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Effective Yield

Formula

`"i" = 1+("NR"/"n"_{"PYr"})^("n"_{"PYr"})-1`

Example

`"298.9039"=1+("19"/"3.2")^("3.2")-1`

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Effective Yield Solution

STEP 0: Pre-Calculation Summary

Formula Used

Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1
i = 1+(NR/n_PYr)^(n_PYr)-1
This formula uses 3 Variables

Variables Used

Effective Yield - Effective Yield refers to the yield of a bond where the bondholder reinvests its interest payments, or coupons, at the same rate.
Nominal Rate - Nominal Rate refers to the interest rate before taking inflation into account.
Number of Payments Per Year - Number of Payments Per Year is the count on the paymenst made for the interest on bond in a particular year.

STEP 1: Convert Input(s) to Base Unit

Nominal Rate: 19 --> No Conversion Required
Number of Payments Per Year: 3.2 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

i = 1+(NR/n_PYr)^(n_PYr)-1 --> 1+(19/3.2)^(3.2)-1

Evaluating ... ...

i = 298.903907444971

STEP 3: Convert Result to Output's Unit

298.903907444971 --> No Conversion Required

FINAL ANSWER

298.903907444971 ≈ 298.9039 <-- Effective Yield

(Calculation completed in 00.004 seconds)

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Credits

Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has created this Calculator and 200+ more calculators!

Verified by Kashish Arora

Satyawati College (DU), New Delhi

Kashish Arora has verified this Calculator and 50+ more calculators!

< 23 Financial Accounting Calculators

DuPont Analysis

Go Return on Equity = (Net Income/Revenue)*(Revenue/Average Total Assets)*(Average Total Assets/Average Total Equity)

Internal Rate of Return

Go Net Present Value = sum(x,0,Number of Periods,((Cashflow at End Period/(1+Internal Rate of Return)^x)))-Initial Investment

Net Operating Cycle

Go Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables)

Discount Lost

Go Discount Lost = (Discount Percentage/(100-Discount Percentage))*(365/(Final Payment Date-Last Discount Date))

Annual Equivalent Cost

Go Annual Equivalent Cost = (Asset Price*Discount Rate)/(1-(1+Discount Rate)^-Number of Periods)

Net Present Value

Go Net Present Value = sum(x,1,Time Period,(Cash Flow/(1+Internal Rate of Return)^x))

Annual Percentage Yield

Go Annual Percentage Yield = (1+(Stated annual interest rate/Compounding Periods))^Compounding Periods-1

Effective Yield

Go Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1

Depletion Charge per Unit

Go Depletion Charge per Unit = (Original Cost-Residual Value)/Total Number of Units Depletion

Value of Stock

Go Value of Stock = Expected Dividend Per Share/(Cost of Capital Equity-Dividend Growth Rate)

Shareholders' Equity given Share Capital, Retained Earnings and Treasury Shares

Go Total Shareholders' Equity = Share Capital+Retained Earnings-Treasury Shares

Operating Cash Flow

Go Operating Cash Flow = Earnings Before Interest and Taxes+Depreciation-Taxes

EBITDA

Go EBITDA = Earnings Before Interest and Taxes+Depreciation+Amortization

Discount Percentage

Go Discount Percentage = ((List Price-Price Paid)/Price Paid)*100

Residual Value

Go Residual Value = (Cost of fixed asset-Scrap Rate)/Lifespan

Long term Debt to Equity ratio

Go Long Term Debt to Equity Ratio = Long Term Debt/Shareholders Fund

EBIT

Go Earnings Before Interest and Taxes = Revenue-Operating Expense

Depletion Expense

Go Depletion Expense = Depletion Charge per Unit*Units Consumed

Shareholders' Equity given Total Assets and Liabilities

Go Total Shareholders' Equity = Total Assets-Total Liabilities

Discount Factor

Go Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods)

Discount given Discount Rate and List Price

Go Discount = Discount Rate*List Price

Discount given List Price and Price Paid

Go Discount = List Price-Price Paid

List Price

Go List Price = Price Paid+Discount

Effective Yield Formula

Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1
i = 1+(NR/n_PYr)^(n_PYr)-1

What is Effective Yield?

Effective yield is the total yield an investor receives, in contrast to the nominal yield which is the stated interest rate of the bond's coupon. Effective yield takes into account the power of compounding on investment returns, while nominal yield does not.
The effective yield is a measure of the coupon rate, which is the interest rate stated on a bond and expressed as a percentage of the face value. Coupon payments on a bond are typically paid semi-annually by the issuer to the bond investor. This means that the investor will receive two coupon payments per year. Effective yield is calculated by dividing the coupon payments by the current market value of the bond.

How to Calculate Effective Yield?

Effective Yield calculator uses Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1 to calculate the Effective Yield, The Effective Yield formula is defined as the return on a bond that has its interest payments (or coupons) reinvested at the same rate by the bondholder. Effective Yield is denoted by i symbol.

How to calculate Effective Yield using this online calculator? To use this online calculator for Effective Yield, enter Nominal Rate (NR) & Number of Payments Per Year (n_PYr) and hit the calculate button. Here is how the Effective Yield calculation can be explained with given input values -> 298.9039 = 1+(19/3.2)^(3.2)-1.

FAQ

What is Effective Yield?

The Effective Yield formula is defined as the return on a bond that has its interest payments (or coupons) reinvested at the same rate by the bondholder and is represented as i = 1+(NR/n_PYr)^(n_PYr)-1 or Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1. Nominal Rate refers to the interest rate before taking inflation into account & Number of Payments Per Year is the count on the paymenst made for the interest on bond in a particular year.

How to calculate Effective Yield?

The Effective Yield formula is defined as the return on a bond that has its interest payments (or coupons) reinvested at the same rate by the bondholder is calculated using Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1. To calculate Effective Yield, you need Nominal Rate (NR) & Number of Payments Per Year (n_PYr). With our tool, you need to enter the respective value for Nominal Rate & Number of Payments Per Year and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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