The following symbols are used in the interest formula equation:

P = Principal net amount payable to the supplier before adding on interest.

i = interest rate expressed in decimal form.

superscript n = number of full periods, for example, the number of days divided by 30.

z = number of residual days, for example, the number of days less than a 30 day period divided by 360.

Interest is determined by using the following formula: Interest = [P times (1 + i divided by 12) to the n power minus P] plus [P + [P times (1 + i divided by 12) to the n power minus P] times i times z].