Interest Formula: Days

Solving for the unknown factor for the formula when time is stated in whole days using either ordinary interest dating or exact interest dating: All Example 1 will use ordinary interest dating and All Example 2 will use exact interest dating in this handout. PXRXT=I P = Principle (The amount borrowed before interest) R = Rate (stated as a one year rate) T = Time (for this handout we will state time in days/360 ordinary interest dating or days/365 exact interest dating) I = Interest (Cost to borrow money from another entity) This box has the basic formula:

Interest

Principle Rate Time

This box shows the basic formula to find principle:

Interest

Principle Rate Time

MJC Revised 1/2012

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Interest Formula: Days

Example 1: Cindy borrows money with a rate of 5% for 180 days with an interest of $125, using ordinary interest dating. Cindys principle is $5,000.

Example 2: Cindy borrows money with a rate of 5% for 180 days with an interest of $123.29, using exact interest dating. Cindys principle is $5,000.

MJC Revised 1/2012

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Interest Formula: Days

This box shows the basic formula to find rate.

Interest

Principle Rate Time

Example 1: Cindy borrows money with a principle of $5,000 for 180 days with an interest of $125. Cindys rate is 5%.

Example 2: Cindy borrows money with a principle of $5,000 for 180 days with an interest of $123.29. Cindys rate is 5%.

MJC Revised 1/2012

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Interest Formula: Days

This box shows the basic formula to find time.

Interest

Principle Rate Time

Example 1: Cindy borrows money with a principle of $5,000, a rate of 5% and with an interest of $125. Cindys time is 180 days.

MJC Revised 1/2012

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Interest Formula: Days

Example 2: Cindy borrows money with a principle of $5,000, a rate of 5% and with an interest of $123.29. Cindys time is 180 days.

Note: When time is less than 1 multiply T by 360 to get the number of days for ordinary interest dating and multiply T by 365 to get the number of days for exact interest dating.

MJC Revised 1/2012

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Interest Formula: Days

This box shows the basic formula to find interest.

Interest

Principle Rate Time

PXRXT=I Example 1: Cindy borrows money with a principle of $5,000, a rate of 5% and with a time of 180 days, using ordinary interest dating. Cindy interest is $125. $5,000 X 5% X 180/360 = I $5,000 X 5%X .5 = I $250 X .5 = $125 Example 2: Cindy borrows money with a principle of $5,000, a rate of 5% and with a time of 180 days, using exact interest dating. Cindys interest is $123.29. $5,000 X 5% X 180/365 = I $5,000 X 5%X .49315 = I $250 X .49315 = $123.29

Note: In order to get .5 for the time you must divide 180 by 360 which will then results in .5 as the answer for example 1. For example 2 you must divide 180 by 365 which will result in .49315 as the rounded answer.

MJC Revised 1/2012

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