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Accrued interest

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Sayed Arif
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Accrued interest - December 10th, 2013

what is Accrued interest ?discuss Accrued interest in detail?
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Asad Khan
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Re: Accrued interest - December 10th, 2013

Accrued interest is basically an accounting phenomenon which occurs due to the difference in timing of cash flows and the recognition of interest. This can be commonly seen in bonds, as they pay interest after a fixed interval say, six months whereas the interest is accrued on a day-to-day basis.
The basic formula for finding the accrued interest is as follows:
Formula:

The major issue with the accrual of interest is the day convention used. Generally, a 30-day month and a 360-day year is used for corporate and municipal bonds whereas it is based on actual calendar days for Government bonds.
Example
Assume a bond with face value of Rs. 100 and interest rate of 10%u0025 pays semi-annual interest payments.
Now, after 3 months,
Accrued interest = 100 x (10%/2) x (3/6) = Rs. 2.5
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Re: Accrued interest - April 20th, 2016

Quote:
Originally Posted by sayed123 View Post
what is Accrued interest ?discuss Accrued interest in detail?
hey buddy,

Please check attachment for Accrued Interest Calculation, so please download and check it.
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File Type: pdf Accrued Interest Calculation.pdf (69.5 KB, 0 views)
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