EFFECT Function in SoftMaker PlanMaker 2026: Effective Annual Interest Rate Explained

An advertised nominal annual rate does not include the extra growth caused by interest being added more than once per year. If each compounding period earns interest on the previous periods’ interest, the effective annual rate is usually higher than the nominal rate for a positive rate with more than one compounding period. EFFECT answers: What annual compound rate corresponds to this stated nominal rate and compounding schedule? [S1]

Use it for comparing deposit offers with different compounding frequencies when compounding is the relevant difference. It is not a regulatory APR/APC/total borrowing-cost calculator: SoftMaker specifically warns that EFFECT excludes commissions and fees and does not necessarily implement a country’s statutory effective-interest rules. [S2]

=EFFECT(NomRate, NPerYear)

SoftMaker 2026 documents two required arguments, in that exact order; there are no optional arguments or documented defaults. [S1]

The manual’s English-language formula uses a comma between arguments and . in decimal examples. Formula punctuation and decimal display can be locale-dependent; confirm your own installation’s accepted separator in the function assistant. Neither decimal-locale argument parsing nor fractional-frequency behavior was executed here. Do not conflate a locale-specific array-constant separator with this function’s argument separator.

The calculation explained

For positive nominal rate r and n regular compounding periods per year, the standard mathematical model is:

Effective annual rate = (1 + r/n)^n - 1

That equation supplies an independent model for checking the numerical examples; it is not a claim about PlanMaker’s internal implementation. Excel documents the same compound-rate relationship separately. [S3]

For 5% quarterly, r = 0.05 and n = 4, so (1 + 0.05/4)^4 - 1 = 0.0509453369140625 as a decimal, or 5.094534%. Rounded to two percentage decimals, the expected value 5.09% matches SoftMaker’s printed example. [S1]

Create a blank workbook and enter these values (the percent format is important):

The output should show 5.09% when formatted with two percentage decimals. If you see 0.050945... instead, the cell is formatted as a general number; that decimal fraction represents 5.0945% rather than an error. These are expected, not native-observed, outputs.

Keep the nominal 5% annual rate fixed while changing only the compounding periods:

This table isolates the effect of frequency rather than comparing different advertised rates. The examples assume regular compounding with no charges; real products may have other terms.

Advanced example: from quoted nominal rate to one-year balance

Suppose a hypothetical $10,000 balance earns a 12% nominal annual rate with monthly compounding. Enter B7 = 12%, B8 = 12, B9 = 10000 (numeric values, not text), then use:

=EFFECT(B7,B8)
=B9*(1+EFFECT(B7,B8))
=B9*EFFECT(B7,B8)

The first is the expected effective rate 12.682503%, the second is the expected year-end balance $11,268.25, and the third is the expected interest $1,268.25. All three come from the independently calculated interest model; these figures do not include tax, fees, withdrawals or changes in interest rate. Display balances as currency and the first result as a percentage.

When the effective rate is already known and you want a nominal rate for a specified compounding frequency, use the separate documented NOMINAL function. [S4]

=NOMINAL(EFFECT(5%,4),4)

Independent expected result: approximately 5.000000%. This round-trip check uses the same period count for both conversions; mixing quarterly and monthly period counts would defeat the comparison. Do not use a rounded display of the EFFECT result as the intermediate input if you need a precise reverse calculation.

PlanMaker’s general manual lists #NUM! for invalid numeric values, #VALUE! for inappropriate parameter types and #NULL! for invalid formulas/missing or extra arguments. It does not, in the inspected EFFECT entry, promise which precise code each EFFECT edge case returns. [S5] Fix the input first.

Microsoft Excel: The English Excel function is also EFFECT(nominal_rate,npery), with the same broad purpose; Microsoft documents frequency truncation to an integer, #VALUE! for nonnumeric inputs, and #NUM! for nominal rate ≤ 0 or frequency < 1. Those are Excel-specific documented outcomes, not PlanMaker runtime test results. [S3]

SoftMaker versions: The PlanMaker 2026/NX English manual and the separately checked 2024 English help document the same two-argument name and a 5%-quarterly example. This confirms documentation-level availability in those versions; it does not establish identical results for every edge case, or a guarantee for every edition/device. [S1][S2][S6] Windows/macOS/Linux/mobile installations were not executed in this batch. PlanMaker 2021 and other older editions were not compared here.

Localized workbooks: The syntax above reproduces the English documentation. Excel’s translated names and decimal/argument separators can vary by language; actual PlanMaker localized formula names, coercions and delimiters should be verified in that installation before copying a locale-specific formula. The underlying percent conversion is independent of how the number is displayed.

• NOMINAL: the inverse rate conversion, documented by SoftMaker on printed page 734 of the PlanMaker 2026 manual.
• Finance comparison: use an effective interest rate only when payment frequency and charges are analyzed separately. Statutory APR or borrowing cost is a different calculation. [S2]
• Spreadsheet-Tutorials function comparison matrix — an existing site tool, not a native-validation claim.
• Spreadsheet-Tutorials editorial standards — source and verification methods.

Claim-level official sources (accessed 2026-10-12 UTC)

• [S1] SoftMaker PlanMaker 2026/NX English manual, printed p. 616–617: EFFECT syntax, argument order, required periods ≥1 and vendor’s 5%-quarterly example. Documentation check, not application execution.
• [S2] SoftMaker PlanMaker 2026/NX English manual, printed p. 617: warning that fees/commissions and some statutory effective-rate definitions are excluded. Documentation check.
• [S3] Microsoft Support: EFFECT for Excel: Excel’s required arguments, fractional-period truncation and error conditions. Excel documentation only.
• [S4] SoftMaker PlanMaker 2026/NX English manual, printed p. 734: NOMINAL syntax and purpose, directly linked conceptually from EFFECT. Documentation check.
• [S5] SoftMaker PlanMaker 2026/NX English manual, printed pp. 522–523: general error-value descriptions. No EFFECT-specific native error experiments.
• [S6] SoftMaker PlanMaker 2024 English reference — EFFECT: same documented syntax, limit and vendor example. Historical document comparison.

Verification boundary: All displayed numeric results are expected and independently calculated; official vendor example is additionally confirmed in S1. Native tests, locale tests, platform/edition-specific acceptance remain outstanding.