Calculating Simple Interest for a Contract I want a formula in excel to calculat

Question

Calculating Simple Interest for a Contract

I want a formula in excel to calculate simple interest for our contracts. Below is how the contract reads:

One hundred and eighty (180) days after the Initial Closing Date, in addition to the Base Purchase Price for each Unit, Buyer shall pay an escalator calculated like simple interest at the rate of four percent (4%) per annum for the period beginning on the Initial Closing Date and ending on the date of Closing on the subject Unit. The Base Purchase Price for a Unit, plus the escalator due, if any, is hereinafter referred to as the "Purchase Price".

My understanding would be to calculate the interest based on a daily rate and then determine the days based on the contract date.

Thanks

Explanation / Answer

Simple interest is a simple multiplication, without compounding. So, the Purchase Price would be

=IF(CD>(ICD+180),(CD-ICD)/365*1.04,1)*BPP

where CD is the Closing Date

ICD is Initial Closing Date

and BPP is Base Purshcase Price

And 365 is the number of days in a year, though some annums are 360 days, depending on the definition....

All of which can be entered in cells that the formula references.

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