Question 164222
Compounding interest follows this formula {{{r effective = e^(r*t) - 1}}} where e is the mathematical constant approximately equal to 2.718..., t is the number of periods (years) and r is the nominal interest rate .  Why this is requires some knowledge of calculus.  However, calculating interest rates using the formula is simple!
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For your problem, we simply plug in the values: {{{r effective = e^(.1*2) - 1 = e^(.2) - 1 = .2214}}}.  Therefore, your effective interest rate is about 22.14%.