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Annualized and Monthly Interest Rate

Annualized and Monthly Interest Rate

Annualized and Monthly Interest Rate

010381.gif010411.gif010382.gif010383.gif
000001.gif The example shows use of monthly interest rate! See also Rounded and Unrounded Monthly Interest Rates!

Let us take for example that you calculate default interest using both methods: that is, the monthly basic interest rate (BIR) as well as the real annualized interest rate for default interest.

So let us calculate interest on principal of €100,000 with the set interest period from December 15th, 1999 to February 29th, 2000.

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Monthly basic interest rate (BIR) and the annualized nominal interest rate (NIR) can be found in the table. Total annualized rate for default interest (ZO) is calculted in the following way (for the formula see Definition of Interest Calculation Method):

Below you can see calculation of rounded default interest (ZO):

Note: Unrounded interes rate is used in calculation!

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Scheme for Calculating Principal Including Interest:

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