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# What does it mean if interest is compounded daily?

The rate of interest compounded daily means, the per annum interest rate is divided by the number of days while calculating the total amount should be paid after a given period.

The formula for calculating the amount to be paid after a given period for compounding rate of interest is given by:

A = P (1 + r/n)(nt)

Here,

A = Total amount after compound interest is applied

P = Trincipal deposit or loan amount

r = The annual rate of interest (expressed as a decimal)

n = The number of times that interest is compounded per year

t = Time period (in years)
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