What is exact interest?

Definition of Exact Interest. Interest paid based on the basis of a 365-day/year schedule by a bank or other financial_institution as opposed to a 360-day basis (ordinary interest). Difference can be material when large principal sums of money are involved.Click to see full answer. Also asked, what is the difference between ordinary and exact interest? ordinary interest – Investment & Finance Definition Interest that is based on a 360-day year instead of a 365-day year. In contrast, exact interest is based on a 365-day year. If large sums of money are involved, the difference can be significant.Secondly, how do you calculate simple interest ordinary interest? Use this simple interest calculator to find A, the Final Investment Value, using the simple interest formula: A = P(1 + rt) where P is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods. Where r is in decimal form; r=R/100; r and t are in the same units of time. Simply so, what is exact interest formula? Ordinary interest is calculated on the basis of a 360-day year or a 30-day month; exact interest is calculated on a 365-day year. The interest formulas for both ordinary and exact interest are actually the same, with time slightly differing when given as number of days. Interest is the sum paid for the use of money.What is a simple interest rate?Simple interest is calculated by multiplying the daily interest rate by the principal, by the number of days that elapse between payments. Simple interest benefits consumers who pay their loans on time or early each month. Auto loans and short-term personal loans are usually simple interest loans.