Excel Core Book
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Calculates accrued interest on investment that pays interest on periodic basis
Syntax of Excel ACCRINT formula:
=ACCRINT(issue, first_interest, settlement, rate, par, frequency, [basis], [calc_method])
Calculate periodic interest of investment with investment that is (issued at this date, with this date of interest payout to investors, bought at this date, agreed on this interest rate, having face value of investment this much, with this frequency of annual payout, with this much number of days a month/year, [considering this calculation method])
There are two main types of investments;
Note the “M” that stands for Maturity.
Issue date is the date at which investment is made available to investors or in other words instrument is issued by the entity. Its not necessarily the date at which investment is made or in other words bought by the investor.
First interest date is the date at which interest is paid out by the entity to its investors.
Settlement date is the date at which investment is acquired or bought by the investor.
Rate is the agreed annual rate of return that entity will pay to investors
Par is the face value or par value of investment
Frequency is the frequency of payouts which can be annual, semi-annual or quarterly.
Basis determines the number of days in a month and year taken as a standard of measurement in particular jurisdiction. In some cases number of days in a month are 30 or what every actual number is. Similarly for years it may be 360 or 365 or actual number of days. This argument helps you select the appropriate one. However, this is an optional argument, if left out Excel will assume it to be “0” which is 30/360.
Calc_method is also an optional argument with a default value of TRUE. TRUE argument calculates accrued interest from Issue date to settlement. Whereas FALSE determines the interest from First interest date to settlement date.
To calculate periodic interest we will use this formula for the above scenario:
=ACCRINT(B1,B2,B3,B4,B5,B6,B7,B8) and it will return 408.91304 as accrued interest.