# Power Pivot Principles: The A to Z of DAX Functions – EFFECT

25 July 2023

*In our long-established Power Pivot Principles articles, we
continue our series on the A to Z of Data Analysis eXpression (DAX) functions. This week, we look at EFFECT. *

* *

*The ***EFFECT*** function*

Does DAX sometimes not have the desired **EFFECT**?
This function returns the effective annual interest rate, given the
nominal annual interest rate and the number of compounding periods per year.

It employs the following syntax:

**EFFECT(nominal_rate, npery)**

It has two [2] arguments in the syntax:

**nominal_rate**: this is required and represents the nominal interest rate**npery**: this is required and represents the number of compounding periods per year.

There are a few remarks for this function:

**EFFECT**which is short of the effective rate is calculated as follows:

- the
**npery**argument is rounded to the nearest integer - an error is returned if:
**nominal_rate**≤ 0**npery**< 1- the
**EFFECT**function is not compatible with Power Pivot and currently it is only compatible with Power BI, SSAS Tabular, Azure AS and SSDT - this function is not supported for use in DirectQuery mode when used in calculated columns or row-level security (RLS) rules.

Consider a nominal interest rate of 5% and our **npery** is 12 months. Therefore, we
will write the following DAX code to convert the nominal rate into the effective
rate:

We will have the following figure:

This is the effective rate after compounding twelve [12] times a year.

*Come back next week for our next post on Power
Pivot in the **Blog** section. In the meantime, please remember we have
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the meantime, you can find all of our Past Power Pivot blogs **here**.*