1. What is Accrued Interest?

Accrued interest is the amount of interest that has accumulated on a principal amount but has not yet been paid or received. It's commonly used in loans, bonds, and savings accounts.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( Principal \) — Initial amount of money
• \( Rate \) — Annual interest rate in decimal form
• \( Days \) — Number of days interest is being calculated for

Explanation: The formula calculates how much interest would accumulate over a specific period based on an annual rate.

3. Importance of Interest Calculation

Details: Accurate interest calculation is crucial for financial planning, loan repayment schedules, investment decisions, and understanding the true cost of borrowing.

4. Using the Calculator

Tips: Enter principal in dollars, rate as a decimal (e.g., 0.05 for 5%), and the number of days. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

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 principal plus accumulated interest.

Q2: Why divide by 365 in the formula?
A: This converts the annual rate to a daily rate based on a 365-day year. Some calculations use 360 days for simplicity.

Q3: How do I convert percentage to decimal?
A: Divide the percentage by 100 (e.g., 5% becomes 0.05).

Q4: Does this work for partial days?
A: The calculator uses whole days. For more precision, you could use fractions of days (e.g., 30.5 days).

Q5: When is simple interest typically used?
A: Simple interest is common for short-term loans, some bonds, and basic savings accounts.