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This article was co-written by Michael R. Lewis. Michael R. Lewis is a retired Texas executive, entrepreneur and investment advisor. He has over 40 years of experience in Business & Finance, including the position of Vice President of Blue Cross Blue Shield of Texas. He holds a BBA in Industrial Management from the University of Texas at Austin.
This article has been viewed 27,748 times.
Knowing how to calculate interest each day is very helpful for calculating how much you earn or pay on loan payments. The daily interest calculation method is also widely used in business, such as to calculate the interest payable from customers or suppliers. Calculating returns in personal finance can help you estimate the cost of closing a mortgage or evaluating options for saving and investing. Here’s how to correctly calculate daily interest for a number of different apps.
Steps
Calculate daily interest by calculator
- You will have to do a separate math for each option to be able to compare.
- Popular spreadsheet programs are Microsoft Excel and iWork Numbers.
- You can also find free spreadsheet apps online like Google Docs or Zoho Sheet.
- Interest is usually calculated on an annual basis; so to get the daily rate you need to divide the annual rate by 365.
- For example, if your investment is $10,000, and this savings earns an interest rate of 0.5%, you would enter “100000” in cell B1 and enter “=0.005/365” in cell B2.
- The term determines how long your investment is left untouched, except for the added interest accrued. In this example, we will use one-year tenor, so cell B3 will be entered “365”.
- Type “=IPMT(B2,1,1,-B1)” in the formula bar. And then press the Enter key.
- The daily interest earned on the above capital, for the first month, is $1,370/day.
Calculate daily interest manually
- The annual percentage rate of 0.5% or 0.005, divided by 365, is 0.00137%, or 0.0000137.
Calculate daily accrued interest
- For example, capital = $2,000, interest rate = 8% or 0.08, term = 365 and number of years is 5.
- For example, using the data from the example in Step 3, principal investment: $2,000, interest rate: 8% or 0.08, cumulative term: 365 and number of years: 5. Cumulative interest =2,000 * (1 + .08/365) ^ (5 * 365) = 2,983.52 USD.
Advice
- You can use the IPMT function to determine the daily interest on a mortgage. For example, if you sell your house in the middle of the month, your final balance will change every day. Daily interest amount can tell exactly how much your balance is.
- You can also use the IPMT function to determine the daily interest on a customer’s late payment.
Warning
- Each country, or each region, state (for the US) has different regulations on interest rate limits and on accrued interest. Therefore, when applying it to your business, you need to carefully and fully study all the laws of the region or state in which you do business before setting up and incorporating policies to calculate interest rates for businesses. late payment.
This article was co-written by Michael R. Lewis. Michael R. Lewis is a retired Texas executive, entrepreneur and investment advisor. He has over 40 years of experience in Business & Finance, including the position of Vice President of Blue Cross Blue Shield of Texas. He holds a BBA in Industrial Management from the University of Texas at Austin.
This article has been viewed 27,748 times.
Knowing how to calculate interest each day is very helpful for calculating how much you earn or pay on loan payments. The daily interest calculation method is also widely used in business, such as to calculate the interest payable from customers or suppliers. Calculating returns in personal finance can help you estimate the cost of closing a mortgage or evaluating options for saving and investing. Here’s how to correctly calculate daily interest for a number of different apps.
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