Enter the principal amount, daily interest rate, and the number of days into the calculator to determine the equated daily installment.
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Equated Daily Installment Formula
The following formula is used to calculate the equated daily installment for a given principal amount, daily interest rate, and number of days.
EDI = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}Variables:
- EDI is the equated daily installment
- P is the principal amount
- r is the daily interest rate
- n is the number of days
To calculate the equated daily installment, multiply the principal amount by the daily interest rate and the result of (1 + daily interest rate) raised to the power of the number of days. Divide this by the result of (1 + daily interest rate) raised to the power of the number of days minus 1.
What is an Equated Daily Installment?
An equated daily installment (EDI) is a fixed amount paid daily to repay a loan over a specified period. It includes both the principal and the interest components, ensuring that the loan is paid off in equal daily installments. This method is commonly used in microfinance and short-term loans where daily repayments are more manageable for borrowers.
How to Calculate Equated Daily Installment?
The following steps outline how to calculate the Equated Daily Installment.
- First, determine the principal amount (P).
- Next, determine the daily interest rate (r).
- Next, determine the number of days (n).
- Finally, calculate the Equated Daily Installment using the formula EDI = (P * r * (1 + r)^n) / ((1 + r)^n - 1).
- After inserting the values and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Principal Amount (P) = $1000
Daily Interest Rate (r) = 0.05%
Number of Days (n) = 30