1. What is Daily Compound Interest?

Daily compound interest calculates interest on both the initial principal and the accumulated interest from previous days. This results in exponential growth of your investment over time.

2. How Does the Calculator Work?

The calculator uses the daily compound interest formula:

Where:

• \( A \) — Final amount including interest
• \( P \) — Principal investment amount
• \( r \) — Annual interest rate (as a percentage)
• \( t \) — Time period in days

Explanation: The formula calculates how much your investment grows when interest is compounded daily over a specified number of days.

3. Importance of Compound Interest

Details: Compound interest is a powerful financial concept that allows investments to grow exponentially over time. The more frequently interest is compounded, the faster your money grows.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage, and the time period in days. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does daily compounding differ from annual compounding?
A: Daily compounding calculates and adds interest every day, resulting in faster growth compared to annual compounding where interest is added only once per year.

Q2: 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 both principal and accumulated interest.

Q3: How many days are considered in a year for this calculation?
A: The formula uses 365 days per year for daily compounding calculations.

Q4: Can I use this for different compounding frequencies?
A: This calculator is specifically designed for daily compounding. Other frequencies (monthly, quarterly, annually) require different formulas.

Q5: Is the interest rate entered as a percentage or decimal?
A: Enter the annual interest rate as a percentage (e.g., enter 5 for 5%, not 0.05).