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Simple Interest Formula:
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Simple interest per days calculates the interest earned or paid on a principal amount based on a daily interest rate derived from an annual percentage rate. It's commonly used for short-term loans, savings accounts, and investments where interest accrues daily.
The calculator uses the simple interest formula:
Where:
Explanation: The formula calculates daily interest by dividing the annual rate by 365 days, then multiplies by the number of days to get the total interest.
Details: Accurate interest calculation is crucial for financial planning, loan repayment estimation, investment returns analysis, and understanding the true cost of borrowing or potential earnings from savings.
Tips: Enter the principal amount in currency units, annual interest rate as a percentage, and the number of days. All values must be positive numbers.
Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest.
Q2: Why divide by 365 days?
A: This converts the annual interest rate to a daily rate, assuming a 365-day year. Some calculations may use 360 days for simplicity.
Q3: Can this calculator be used for any currency?
A: Yes, the calculator works with any currency as long as you maintain consistent currency units for both principal and interest.
Q4: Is this suitable for long-term investments?
A: For long-term investments, compound interest calculations are more appropriate as they account for interest earned on interest.
Q5: How accurate is this calculation for leap years?
A: The calculation uses 365 days for simplicity. For precise calculations involving leap years, you may need to adjust the day count accordingly.