We first divide the nominal interest rate of 12.87% by the number of days in a year, 365, to get the effective interest per day (by which it is compounded). This gives us 0.03526%. Then we raise (1+i)^(number of days), which is (1.0003526)^365, and this gives us 1.1373. This final result is equivalent to 13.73% effective interest rate per year.
