Final answer:
The nominal interest rate is calculated by multiplying the interest rate per compounding period by the number of compounding periods in a year.
Step-by-step explanation:
The nominal interest rate is found by multiplying the interest rate per compounding period by the number of compounding periods per year. Unlike simple interest, which is calculated only on the principal amount, compound interest is an interest rate calculation on the principal plus the accumulated interest. To compute compound interest, you find the difference between the future value and the present value of the principal.