1. What is Daily Interest Calculation?

Daily interest calculation determines the amount of interest earned or paid each day on a principal amount. It uses simple interest accrual based on the annual interest rate divided by 365 days.

2. How Does the Calculator Work?

The calculator uses the daily interest formula:

Where:

• \( Principal \) — Initial investment or loan amount (currency)
• \( Annual\ Rate \) — Annual interest rate expressed as decimal
• \( 365 \) — Number of days in a year for daily calculation

Explanation: This formula calculates the simple daily interest by dividing the annual rate by 365 days and multiplying by the principal amount.

3. Importance of Daily Interest Calculation

Details: Daily interest calculation is essential for understanding daily investment returns, loan interest accrual, and comparing different financial products with daily compounding or accrual features.

4. Using the Calculator

Tips: Enter principal amount in your local currency, annual interest rate as a decimal (e.g., 0.05 for 5%). All values must be valid (principal > 0, annual rate between 0-1).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between daily simple interest and daily compound interest?
A: Daily simple interest calculates interest only on the principal, while compound interest calculates interest on both principal and accumulated interest.

Q2: Why divide by 365 instead of 360?
A: 365 represents the actual number of days in a year, while 360 is sometimes used in commercial calculations. Using 365 provides more accurate daily calculations.

Q3: Can I use this for loan interest calculations?
A: Yes, this calculator works for both investment returns and loan interest accrual on a daily basis.

Q4: How accurate is daily interest calculation?
A: Very accurate for simple interest scenarios. For precise financial planning, consider compounding effects and actual day counts.

Q5: Should I use this for long-term investments?
A: For long-term investments, compound interest calculations are more appropriate as they account for interest earned on previously accumulated interest.