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multiply that by 12% multiplied by 183/365
I guess you mean 12% (a factor of 1.12) to the power of 183/365?
ie
1,000,000*1.12^(913/365)=1,327,738
compared with
1,000,000 *1.12^2=1,254,400
1,254,400*1.12^(183/365)=1,327,738Edit: Tester has spotted your error. His method for calculating the 5.83% is the same as you gave in your first (correct) example and I showed in my last line (5.83%=100*(1.12^183/365-1)
hamrack
I'm working out annual compound interest and trying to get my head around which is the correct method.
Normally I'd just do
with X being the principal, r the rate and p the number of time periods.
So for 1,000,000 at 12% per annum from 1 July 2017 to 31 December 2019 (913 days) it is
But I'm running into issues with part years. Say I'm looking at interest from 1 July 2017 to 31 December 2019
Using the formula above gives me 1,327,738
However, if I compound for 2 years I get 1,254,400
If I then multiply that by 12% multiplied by 183/365 (1 July 19 to 31 December 19) I get 1,329,870 when I would expect them to be the same. What am I missing?