1. What is Gross Interest and AER?

Gross interest represents the total interest earned before any deductions, while AER (Annual Equivalent Rate) shows the interest rate you would get if interest was paid and compounded once each year.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( AER \) — Annual Equivalent Rate (%)
• \( 365 \) — Number of days in a year for daily approximation
• \( Gross\ Rate \) — Calculated gross interest rate (%)

Explanation: This formula provides a daily approximation of gross interest by multiplying the AER by 365 days.

3. Importance of Gross Interest Calculation

Details: Understanding gross interest helps investors compare different financial products and make informed decisions about their investments.

4. Using the Calculator

Tips: Enter the AER percentage and select the calculation type. For daily approximation, the calculator multiplies AER by 365.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between gross interest and net interest?
A: Gross interest is the total interest earned before any taxes or fees, while net interest is what you actually receive after deductions.

Q2: Why multiply AER by 365 for gross interest?
A: This provides a daily approximation of gross interest, assuming interest compounds daily throughout the year.

Q3: Is this calculation accurate for all financial products?
A: This is an approximation. Actual gross interest may vary based on specific product terms and compounding frequency.

Q4: When should I use exact calculation vs daily approximation?
A: Use daily approximation for quick estimates and exact calculation when you need precise figures for specific financial products.

Q5: Can I use this for savings accounts and investments?
A: Yes, this calculation works for various financial products that use AER to represent annual interest rates.