1. What is Daily Per Diem Amortization?

Daily Per Diem Amortization calculates the daily interest amount on a principal sum based on a given annual rate. It's commonly used in finance to determine daily interest accruals for loans, investments, and other financial instruments.

2. How Does the Calculator Work?

The calculator uses the Per Diem formula:

Where:

• \( Principal \) — The initial amount or outstanding balance (currency)
• \( Rate \) — The annual interest rate (unitless, expressed as decimal)

Explanation: The formula divides the annual interest (Principal × Rate) by 365 days to get the daily interest amount.

3. Importance of Daily Per Diem Calculation

Details: Accurate daily per diem calculation is essential for precise interest accrual tracking, loan amortization schedules, investment returns calculation, and financial planning.

4. Using the Calculator

Tips: Enter the principal amount in currency units and the annual rate as a decimal (e.g., 0.05 for 5%). Both values must be valid (principal > 0, rate ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: While some financial institutions use 360 days for simplicity, this calculator uses 365 days for more precise daily calculations that match the actual calendar year.

Q2: Can this be used for compound interest calculations?
A: This calculates simple daily interest. For compound interest, the calculation would need to account for interest being added to the principal daily.

Q3: How is the rate input formatted?
A: Enter the rate as a decimal. For example, enter 0.075 for a 7.5% annual rate.

Q4: What currencies can be used?
A: The calculator works with any currency unit. The result will be in the same currency units as the principal input.

Q5: Is this suitable for leap years?
A: This calculator uses 365 days for consistency. For precise leap year calculations, you may need to adjust manually for 366 days.