APR vs Effective Annual Rate (EAR) — Notebook Template

Convert nominal APR to effective annual rate (EAR) given compounding frequency. Useful for apples-to-apples comparisons.

finance apr effective-rate interest

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What this template does

This is a ready-to-run GetCalcMaster Notebook starter. Open it into Notebook, run once with defaults, then tweak inputs and keep your assumptions next to the math.

How to use it (recommended)

Open in Notebook.
Enter nominal APR and compounding periods per year.
Compute EAR and compare across offers.
Sanity check: EAR should be ≥ APR when compounding > 1/year.
Record assumptions (compounding, fees, promos).

Tip: When a result matters, verify it twice: a unit check + a second method (graph/estimate).

Preview (first cells)

This preview is for readability. The full template loads into Notebook when you click Open.

TEXT

# APR → Effective Annual Rate (EAR)

Nominal APR can be misleading when compounding differs.

If APR is compounded **m** times per year:

**EAR = (1 + APR/m)^m − 1**

MATH

APR = 0.18

MATH

m = 12   # compounds per year (12 = monthly)

MATH

EAR = (1 + APR/m)^m - 1

MATH

EAR

MATH

# Compare: if m=1 then EAR=APR