The article will walk you through two straightforward Excel procedures to convert a monthly** interest rate** to an annual rate.

We’ll use the following sample dataset showing the monthly interest rate of a private bank over a period of ten years as an example.

Here’s an overview of the final output we will achieve.

**How to Convert Monthly Interest Rate to Annual in Excel: 2 Methods**

Suppose we have the following dataset:

Let’s convert the monthly interest rate to an annual interest rate

**Method 1 – Converting a Simple Monthly Interest Rate to Annual by Simple Multiplication**

In this section, we’ll convert a monthly interest rate to an annual interest rate in the case of simple interest. We only need to use the multiplication operator to multiply the monthly rate by 12 to get the annual rate. No additional functions are needed.

**Steps**:

- In cell
**E5**, enter the following formula:

`=C5*D5`

**NOTE**: The “*****” sign indicates the multiplication operator.

- Press
**ENTER**to get the result.

- Use the
**Fill Handle**to drag the formula down to cell**E14**.

We have the calculated result for the rest of the years too.

**Method 2 – Converting a Monthly Compound Interest Rate to Annual Using the POWER Function**

Now we’ll carry out the same task in the case of compound interest. We’ll use addition, subtraction, multiplication & division, operators, parenthesis, and a function named **POWER**.

**Steps**:

- In cell
**E5**, enter the following formula:

`=(POWER((1+D5/100),12)-1)*100`

** Formula Breakdown**

**D5/100**→ becomes

0.11/100 → 0.0011

**1+D5/100**→ becomes

1+0.0011 → 1.0011

**(POWER((1+D5/100),12)**→ becomes

(1.0011)^{12}→ 1.0133

**(POWER((1+D5/100),12)-1)**→ becomes

1.0133 – 1 → 0.0133

**(POWER((1+D5/100),12)-1)*100**→ becomes

0.0133*100 → 1.33

- Press
**ENTER**to return the expected result.

- Use the
**Fill Handle**to obtain the rest of the results.

**Read More: **How to Create Effective Interest Method of Amortization in Excel

**Download Practice Workbook**

## Related Articles

- How to Calculate Monthly Interest Rate in Excel
- How to Calculate APR in Excel
- How to Calculate Interest Rate from EMI in Excel

**<< Go Back to How to Calculate Interest Rate in Excel | ****Excel for Finance**** | ****Learn Excel**