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How to Convert Interest Rate

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Calculate interest rate

The interest rate is made up of two values: the percent and the number of days in which this percentage is realized. We will produce a template with which we can recalculate the interest rate according to the difference in number of days. There are two ways of calculating interest rate: proportional and conform. The first is the regular interest bearing account, and the other compound. This means that the basis for the calculation takes the interest calculated in the previous period. Also, the conversion must take into account the accounting method, since in some cases there are significant differences. Thus, the interest rate 1% for 1 day is in 365 days 365% in proportional method and 3678% in conformal method.

We make the template. Please note the columns and rows so you can copy the formula.

how-to-calculate-interest-rate-in-excel

Calculate interest rate conformal method

First, we will perform the calculation of conformal method. This method is more accurate, but because of its’ complexity it is used less frequently than proportional method.

Copy the formula in cell A8

=(((1+A3/100)^(A5/B3))-1)*100

how-to-calculate-interest-rate-in-excel

Calculate interest rate proportional method

Copy the formula in cell B8

=(A3/B3)*A5

how-to-calculate-interest-rate-in-excel

As you can see the result in a proportional manner is completely different. Such major difference accrues when a period of calculation is very short and the interest rate is very high.

Convert annual interest rate to monthly

how-to-calculate-interest-rate-in-excel

Convert monthly interest rate to annual

how-to-calculate-interest-rate-in-excel

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Calculate inflation rate

This calculation can also be used for conversion of inflation. Often we come across information: "Inflation in February was 0.3%." February in normal year has 28 days, we are interested in what this means on an annual basis (in 365 days). For the calculation we are using conformal method.

Convert an annual inflation rate into a monthly rate

how-to-calculate-interest-rate-in-excel

Convert a monthly inflation rate into a annual rate

how-to-calculate-interest-rate-in-excel

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Some examples of conversion rates

Interest rate - %Interest rate - daysNew interest rate - daysNew interest rate - % conformalNew interest rate - % proportional

0.1

1

365

44.03

36.50

0.5

1

365

517.47

182.50

1

1

365

3678.34

365.00

0.1

30

365

1.22

1.22

0.5

30

365

6.26

6.08

1

30

365

12.87

12.17

1

365

30

0.08

0.08

2

365

31

0.17

0.17

5

365

32

0.43

0.44

8

365

33

0.70

0.72

10

365

34

0.89

0.93

12

365

35

1.09

1.15

15

365

36

1.39

1.48

0.1

28

31

0.11

0.11

0.4

28

31

0.44

0.44

0.1

31

28

0.09

0.09

0.4

31

28

0.36

0.36

Estimated time of preparation and production

Prep timeCook timeReady inYields

10 min

35 min

45 min

Calculator interest rates

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