1. What is Per Diem Interest?

Per diem interest is the daily interest charge calculated on a loan or investment. For DOD (Department of Defense) purposes, it's often used to calculate daily interest amounts for various financial transactions.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Principal \) — The initial amount of money
• \( Annual\ Interest\ Rate \) — The yearly interest rate (in percentage)
• \( 365 \) — Number of days in a year

Explanation: The formula converts the annual rate to a daily rate by dividing by 365 days, then multiplies by the principal amount.

3. Importance of Per Diem Calculation

Details: Calculating per diem interest is crucial for understanding daily interest costs, especially for short-term loans or when making partial payments between regular payment dates.

4. Using the Calculator

Tips: Enter the principal amount in dollars and the annual interest rate as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: This calculator uses actual/365 day count convention. Some institutions use 360 days - check your specific requirements.

Q2: Does this account for compounding?
A: No, this calculates simple daily interest. For compound interest, a different formula would be needed.

Q3: How accurate is this for leap years?
A: The difference is minimal (0.27% difference between 365 and 366 days), but for precise calculations in a leap year, you could use 366 days.

Q4: Can this be used for mortgage per diem?
A: Yes, the same principle applies, though mortgages may have different day count conventions.

Q5: What's the DOD standard for per diem calculations?
A: DOD typically follows standard financial practices, but always verify with current DOD financial regulations.