How to Calculate Periodic Rates in Excel
By Carter McBride
Even though interest rates are usually quoted on an annual basis, they are typically calculated over shorter periods, either monthly or daily. This is known as the periodic rate. If you know the annual rate and the length of each period, the periodic rate is easy to calculate. One tool that can be used for this is Microsoft Excel, a spreadsheet program from Microsoft which is available as a single application or as part of the Microsoft Office suite of applications.
Open Excel by double-clicking its icon on your desktop.
Determine your period and how many periods occur in a year. For example, monthly periods occur 12 times a year.
Select a cell in the Excel workbook by clicking it, then type the "=" key (without quotation marks).
Type the interest rate after the "=." Remember, interest is a percentage, so either use the "%" after the number or divide the rate by 100 to specify it in decimal form. For example, if the interest rate is 6.5%, entering either "=6.5%" or "=.065" will specify the same thing.
Type "/" then type the number of times you period occurs in a year after the interest rate. In the example, assume your interest rate is 17 percent. Your cell should look like "=17%/12" or =0.17/12."
Press "Enter." Your periodic rate will display in the cell.
Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.