How do I find the interest payment?
1. To find the interest accrued on a convertible note, click 'Convertibles' under Securities.
2. Select the note you want to view and you will see the interest accrued as of the interest accrual start date.
Interest accrued field is based on four fields: Interest rate, Interest accrual period, day count basis and interest type.
The below calculation demonstrates the difference between the Simple Interest Method and the Compound Interest Method:
1. Simple Interest Formula (Actual/365)
Principal Loan Amount = $100,000
Rate = 6% per annum
Daily Interest = $16.44 (($100,000x 0.06)/365)
In this case, Actual = 366 days (from interest start date to interest last accrued)
Annual Interest = $6,016.44 ($16.44 x 366/365)
Total amount = $106,016.44
2. Compound Interest Formula (Actual/365)
Interest rate per year (i) = (0.06/2)*(366/365)
Total amount = $106,106.93 (100,000 * (1+ (0.06/2)*(366/365))^(2)
Annual interest = 106,106.93 - 100,000= $6,106.93.