Financing Projects

• Bonds are a form of debt financing through which the government or big investment companies raise money for development projects by borrowing money and repaying it with interest over a period of time. The bonds don’t have to mature to be paid with interest; the interest is paid depending on the accumulated period.
  
  

Calculating Accrued Interest

• Accrued interest is calculated as the amount that has not yet been paid due to the outstanding balance yet to be cleared on a bond. To calculate the amount of the accrued interest on bonds, you need to identify the number of days that have passed since the last disbursement of interest was made to the person owning the bond.
  
  

Accrued Interest Period

• Different methods of calculating accrued interest are used. You need to know the number of days in a month to ensure that you make accurate values of the accrued interest. The interest accrues until the payment on the interest is made. After paying the interest, the balance of accrued interest is zero.
  
  

Calculating Compound Interest

• Compound interest is more difficult to compute than accrued interest. With this method, interest is paid on the unpaid interest. To calculate compound interest, you need to know the face value of the bond, the interest rate and the issuing period until the bond maturity is reached. The interest is added to the principal (total value of the bonds), and the new value is treated as the new principal.