How to Calculate Daily, Monthly, and Annual Interest

Understanding how interest is calculated is essential for managing loans, savings, and investments. Below, we explain how to calculate daily, monthly, and annual interest using simple formulas.

1. Annual Interest Calculation

The formula for calculating annual interest is:

Interest = Principal × Rate

Example: If you invest $10,000 at an annual interest rate of 5%:

Interest = 10,000 × 0.05 = $500

2. Monthly Interest Calculation

To find monthly interest, divide the annual interest rate by 12:

Monthly Interest = (Principal × Rate) / 12

Example: Using the same $10,000 investment at 5% annual interest:

Monthly Interest = (10,000 × 0.05) / 12 = $41.67

3. Daily Interest Calculation

To find daily interest, divide the annual interest rate by 365:

Daily Interest = (Principal × Rate) / 365

Example: For a $10,000 investment at 5% annual interest:

Daily Interest = (10,000 × 0.05) / 365 = $1.37

4. Compound Interest Calculation

If interest is compounded, the formula is:

A = P (1 + r/n)^(nt)

Where:

• A = Final Amount
• P = Principal
• r = Annual Interest Rate (decimal)
• n = Number of times interest compounds per year
• t = Number of years

Example: If $10,000 is invested at 5% compounded monthly for 3 years:

A = 10,000 × (1 + 0.05/12)^(12×3) = $11,616.17

Interest Calculator

Use the calculator below to calculate interest based on your inputs:

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