About Per Diem Calculator (Formula)
Per diem is a type of interest calculated on a daily basis. It is typically used for short-term loans or credit lines. The formula used to calculate per diem interest is:
DI = (AR / 365) * P
DI = Per diem interest AR = Annual interest rate (expressed as a decimal) P = Principal amount (the initial amount of the loan or credit line)
It’s important to note that the formula assumes a 365-day year, so if the loan or credit line is for a period of time that is not a full year, the formula should be adjusted accordingly.
The formula above is used to calculate the per-diem interest for a day and as you can see, it’s the annual interest rate divided by 365 days and multiplied by the principal.