Accrued interest refers to interest generated on an outstanding debt during a period of time, but the payment has not yet been made or received by the borrower or lender.
Accrued interest is an important consideration when purchasing or selling a bond.
Formula to calculate accrued interest.
Example:
Suppose you borrowed a loan amounting to $ 10,000, and the interest rate is 12%, calculate the accrued interest if you didn’t pay the loan interest for 210 days.
Therefore, the accrued interest is $ 69,041.
