Normally interest rate is expressed for a year. In case, com-pounding is done semi-annually or quarterly or monthly or weekly, interest rate & compounding to be adjusted accordingly to alter the number of time periods. The formula FVn = (1+r)n will get altered as below:
![Image 26](https://www.vskills.in/lms/wp-content/uploads/2016/06/Image-26-6.jpg)
Where m is the number of compounding per year
The interest rate specified on annual basis is known as the Nominal Interest Rate. If compounding done in a year is more than once, the actual rate of interest is called the
Effective Interest Rate (EIR) /Annual Percentage Rate (APR), which can be ascertained as below:
![Image 27](https://www.vskills.in/lms/wp-content/uploads/2016/06/Image-27-5.jpg)
Similar to Future Value, Present Value of cash flows more than once a year can be discounted with the following formula:
![Image 28](https://www.vskills.in/lms/wp-content/uploads/2016/06/Image-28-6.jpg)