bri said:
I wish to compare a loan at 6.25% per month with a loan at 6.96% per
year. Is there a formula for converting Monthly percentage with yearly
percentage?
Yes. But I suspect you are misinterpreting or misstating
the numbers.
A loan of "6.25% per month" would be nominally 75% per
year (6.25% * 12) and effectively nearly 107%. I presume
that is not what you mean.
I suspect you mean that you want to convert a nominal
rate of 6.25% to an APR assuming a monthly period, in
order to compare to another APR of 6.96%.
At least two ways to do that:
=FV(6.25%/12,12,,-1)-1
=EFFECT(6.25%,12)
Be sure to format the cell as Percentage with 2 decimal
places. If EFFECT() is not available you, read the Help
text to see how to install the Analysis Toolpak add-in.
Caveat #1: US law requires that lenders specify at least
the APR, I believe. Are you sure that 6.25% is not the
APR already?
Caveat #2: The answer above is limited to the facts in
your question. A change in facts can alter the answer
radically. For example, if the loan is for a mortgage,
the APR computation is more complex, and it may differ
from lender to lender to some degree :-(.
