Annual equivalent rate (previous rates in brackets)

This is where measures such as the annual equivalent rates (AER) and annual percentage rate (APR) come in handy.

However, when dealing with deposit accounts, the annual percentage yield (APY) or annual equivalent rate (AER) is quoted to consumers for comparison purposes.

Therefore, IRR overstates the annual equivalent rate of return for a project whose interim cash flows are reinvested at a rate lower than the calculated IRR.

This equivalent yearly rate may be referred to as annual percentage rate (APR), annual equivalent rate (AER), effective interest rate, effective annual rate, and by other terms.

The effective interest rate, effective annual interest rate, annual equivalent rate (AER) or simply effective rate is the interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears.