Lets say, I'll get 100.000 USD in 30 days, but I need most of the money now. I find a (possibly weird) bank who offers me 1.25% interest for these 30 days, which is $1250. So they pay me 98.750 USD now and I'll have to repay 100.000 USD in 30 days - everyone is happy with the deal.
However, one day before I have to pay back the money to the bank I loose all my memory. I see the transfer of 98.750 USD and I have the offer with the interest rate of 1.25%, but I don't remember neither the 1250 USD nor the full 100.000 USD. How do I calculate the interest amount (the total is easy from there)?
98.750 * 0.0125 = 1234.375 is obviously wrong. ;-)