Exact interest
Exact interest
Exact interest is the method of calculating interest expense that's based on a 365-day year. Some debts accrue interest for 360 days each year, while others accrue 365 days of interest annually. The method used for a given debt might be a point of negotiation between lender and borrower prior to funding, because it affects the actual annual interest costs of the loan. The loan documentation for a given debt would specify which method is to be used.
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