subject: Compound Interest Formula For Daily Compounding [print this page] With the compound interest formula, getting the answer to how much cash profit you will get or would have to pay from a compound interest investment or loan would be a breeze. Today, since most of the monetary organizations offer daily compounding, we should use a compound interest formula with daily compounding. With this, we will be able to see how big we can get from your savings. For loans, we will see how much interest you need to pay off. With the compound interest formula, you will also be able to use it as a comparison tool. If you want to know the benefits of variations of rates on interest, this would help you in a big way in knowing which banks give the most perfect deal for you.
To compute using the compound interest formula with daily compounding, you must first have the initial amount that you would deposit in the monetary organization.
For loans, this is the base amount of the total loan amount. In other words, for both investment and loan, it is known as the principal amount. In the compound interest formula, we can use the variable "P" for it.
To compute using the compound interest formula with daily compounding, you must next have the rate of interest of the loan or investment.
This plays a big role in the formula because the amount that you"ll get or will have to pay depends on it. Usually, in formulas, it is referred to as the variable "r". Remember to also use the decimal form of it in computations to get the correct amount. Using the percent form, move the decimal place two places to the left to get its decimal form.
To compute using the compound interest formula with daily compounding, you must next have the number of compounding in a year the loan or investment has.
Since the formula is going to be for daily compounding, the number would be three hundred sixty five. This is the number of days in a year. For the formula, it is usually referred to as the variable "n".
To compute using the compound interest formula with daily compounding, you must next have the number of years the loan term or investment term that you have agreed on.
This is the number of years that you will save in a monetary organization. For loan, it is the time given to pay off the entire loan off. It is usually referred in the compound interest formula as the variable "t".
Now That You Have All the Needed Variables in the Compound Interest Formula, The Formula Will Look Like This:
