When interest is calculated daily, it means the interest that accrues on the account is added to the account each day. This additional interest starts accruing more interest the next day. To take this into account, you need to use the compound interest formula to accurately predict how much interest will accrue on your account. You need to know the annual rate, how many days the money remains in your account and how much you start with.
- Skill level:
- Moderately Easy
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Things you need
Enter the annual interest rate. For example, if the annual rate equals 2.84 per cent, enter 2.84.
Push the division sign then enter 365, and push enter to find the periodic rate. In this example, the calculator would display 0.0077808219178082.
Push the division sign, enter 100 and push the equals sign to convert to a decimal periodic rate. In this example, the calculator would display 0.00007780821917.
Push the plus sign, then 1, then the equals sign to add 1 to the periodic rate. In this example, the calculator will display 1.000077808.
Push the exponent sign, enter the number of days interest accrues and push the equals sign. In this example, if interest accrued for 200 days, enter 200 and when you push the equals sign, the calculator will display 1.015682742.
Push the subtraction sign, enter 1 and push the equals sign to find the rate of increase over the specified term. In this example, the calculator will display 0.015682742 after you press the equals key.
Push the multiplication key, enter the original amount and press the equals key to find the amount of compound interest. Completing the example, if you start with £585, push the multiplication key, enter 900 and push the equals key to see that you would accrue £9.10 in interest.
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