MCTA Treasurer Practice Exam

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What is the per diem interest formula?

Total Principal / 365

Total Principal x Rate / 365

Total Principal x Rate (.16) / 365

Per diem interest is the daily amount of interest earned or owed on a loan or investment. To get that daily figure, you take the annual interest on the principal (principal times the annual rate) and then divide by 365 days. If the annual rate is 16%, expressed as a decimal 0.16, the daily interest is principal × 0.16 ÷ 365. For example, with a $100,000 principal, the annual interest is $16,000, and the per diem is about $16,000 ÷ 365 ≈ $43.84. The key point is dividing by 365 to convert annual interest to a single day, and using the rate in decimal form so the math aligns.

Total Principal x Rate x 365