Libor Rate Calculator

The LIBOR (London Interbank Offered Rate) is a benchmark interest rate that major global banks use to lend to one another in the international interbank market. It plays a critical role in determining interest rates for loans, mortgages, and financial instruments.

How the LIBOR Rate Calculation Works:

• Principal Amount: The initial amount of the loan.
• LIBOR Rate: The percentage rate applied.
• Loan Term (in days): The period for which the loan is taken.

Formula:

The LIBOR interest amount is calculated using the formula:

\[ \text{Interest Amount} = \text{Principal} \times \left(\frac{\text{LIBOR Rate}}{100} \div 360\right) \times \text{Loan Term} \]

The total amount payable is the sum of the principal and interest.

Example:

For a principal of $1,000, a LIBOR rate of 1%, and a loan term of 90 days:

\[ \text{Interest Amount} = 1000 \times \left(\frac{1}{100} \div 360\right) \times 90 \approx 2.5 \text{ dollars} \]

Total amount payable: $1,002.5.

This calculator is useful for finance professionals, loan officers, and businesses managing international financing arrangements.