In this video on Daily Compound Interest, here we discuss how to calculate daily compound interest along with its formula and practical examples.
๐๐ก๐๐ญ ๐ข๐ฌ ๐๐๐ข๐ฅ๐ฒ ๐๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐ ๐๐ง๐ญ๐๐ซ๐๐ฌ๐ญ?
โโโโโโโโโโโโโโโโโโโ-
Daily compounded interest means interest is accumulated on a daily basis and is calculated by charging interest on the principal plus interest earned on a daily basis and hence is higher than interest compounded on a monthly / quarterly basis due to high compounding frequency.
๐๐๐ข๐ฅ๐ฒ ๐๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐ ๐๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐
๐จ๐ซ๐ฆ๐ฎ๐ฅ๐
โโโโโโโโโโโโโโโโโโโโ
A=(P (1+r/n)^(nt)) โ P
๐๐๐ข๐ฅ๐ฒ ๐๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐ ๐๐ง๐ญ๐๐ซ๐๐ฌ๐ญ ๐๐ฑ๐๐ฆ๐ฉ๐ฅ๐
โโโโโโโโโโโโโโโโโโโโ
The bank borrows a total of $5000 where the interest rate is 7% and the balance is borrowed for a term of 3 years. Letโs figure out how much the bank will measure the compounded interest on the loan provided.
From above given data we get,
Principle = $5000, Annual Interest = 7%, N = 365, Time(years) = 3
By using above formula we get,
=($5000*(1+7/365)^(365*3))-$5000
= 1168.27
To know more about the ๐๐๐ข๐ฅ๐ฒ ๐๐จ๐ฆ๐ฉ๐จ๐ฎ๐ง๐ ๐๐ง๐ญ๐๐ซ๐๐ฌ๐ญ, you can go to this ๐ฅ๐ข๐ง๐ค ๐ก๐๐ซ๐:- https://www.wallstreetmojo.com/daily-compound-interest/
Subscribe to our channel to get new updated videos. Click the button above to subscribe or click on the link below to subscribe โ https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw?sub_confirmation=1