21 October 2010
Step 1 Take the annual interest rate let us say 12% p.a. Now compute the daily interest rate 12%/365 = 0.0329% per day So this now your interest rate per day.
21 October 2010
Step 3 If you want to know how much this will be at the end of Day 20 (20 days compounded interest), then do like this: 1.000329 raised to 20th power. In excel do the following =1.000329^20 you will get 1.006596.
21 October 2010
Final Note So the interest is 0.006596. You can recheck this by doing daily and carrying forward the balance and see the result will be the same. Through excel sheet you can do a template so that it becomes easy every time.
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