00:01
We have here a $2 ,700 loan.
00:08
We have an apr of 7 .5%, which is 0 .075.
00:18
And the $2 ,700 loan, let's see here, that's a 2.
00:24
That is my principal.
00:27
So p is $2 ,700.
00:29
And we want to now calculate the periodic rate of interest for the first period.
00:35
If you're calculating monthly, well, monthly means that my frequency per year, n, is 12.
00:44
So my periodic interest rate is r over n, which is 0 .075.
01:01
Divided by 12, and that is 0 .00625, and your interest for the first period is your principal outstanding, times the periodic rate, so this then is your 0 .0625 times 2700, and that is equal to $16 .88.
01:39
And for me, we want to do this daily.
01:44
So my frequency per year then is 365.
01:49
The periodic rate, r over n, is going to be 0 .075 divided by 365.
01:59
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