## About This Tool

The online Effective Yield Calculator is used to calculate the effective yield which is an annual rate of return associated with a periodic interest rate, based on the nominal annual interest rate and the number of payment periods in one year.

## Formula

The effective yield is calculated in the following way, where i is the nominal interest rate, and n the number of payment periods in one year (for example, 12 if the interest is paid monthly):

[1 + (i/n)]^{n} - 1