Nominal interest rate: Difference between revisions

A loan with daily compounding will have a substantially higher rate in effective annual terms. For a loan with a 10% nominal annual rate and daily compounding, the effective annual rate is 10.506516%. For a loan of $10,000 (paid at the end of the year in a single [[lump sum]]), the borrower would pay $51.56 more than one who was charged 10% interest, compounded annually.