Thanks, your reply was very helpful. I have an example where the annual
compounded rate is 7.3% and this is stated as a monthly rate of 0.592% and I
would like to be able to calculate that. Using your formula gives 0.589%. I
see your point about about daily interest charging, is there any way I can
fine tune the formula to give the 0.592% result?
--
David B


" wrote:

David B wrote:
How can I get the monthly rate from a compounded
annual interest rate?

I assume you mean "the monthly compounded rate from
the annual percentage rate (APR)".

Some people will say: simply divide APR by 12.

But if the compounding frequency is monthly, the
correct monthly rate is =RATE(12,,-1,1.045) for an
APR of 4.5%, for example (1.045 = 1 + APR).

However, even when the rate is specified in monthly
or annual terms, it is often compounded daily. In
that case, the monthly rate will vary depending on
the number of days in the month. A "typical" monthly
rate is =FV(RATE(365,,-1,1.045),30,,-1)-1.