Interest payable constantly accrues on a loan, but if you are paying as you go, the interest accrued is not compounded. Therefore, a simple interest formula allows you to compute your accrued interest payable. However, interest rates are expressed as annual rates, which means the rate must be adjusted for periodic payments, such as monthly, quarterly or multiple-day accrued interest.
Divide the interest rate, in decimal form, by the number of periods in a year to calculate the periodic interest rate. To calculate interest accrued for a certain number of months, divide by 12. For quarters, divide by four. For daily calculations, divide by 365. Some investment vehicles, such as bonds, use 360 days in a year when calculating daily interest rate, so confirm that information with your lender before calculating your accrued interest. For example, for a 30-day bond with an interest rate of 7 percent you would divide 0.07 by 360 to get 0.00019444.
Multiply the periodic interest rate by the number of periods for which you need to calculate interest accrued. In the example, multiply 0.00019444 by 30 to get 0.00583333.
Multiply the value from Step 2 by the loan amount to calculate accrued interest payable. If the previous example was for a $1,000 bond, $5.83 in interest payable accrued.
- Hemera Technologies/AbleStock.com/Getty Images