Why is this the formula (FP -FPt)(contract size)/(1 + (rate*(days/360)) where we multiply by days/360 instead of TO THE POWER

When marking to market a forward prior to maturity (in Economics section), why is this the formula (FP -FPt)(contract size)/(1 + (rate***(days/360))** where we multiply by days/360 instead of taking the TO THE POWER of days/360? I thought when we discount back the value of the forward in the Derivatives section we do FP/(1+RFt) ^days/360

Please help? These are the stupid things that cost exam points, even when you “know” the material.

It depends on the type of interest rate you’re using.

If you’re using a nominal rate (e.g., LIBOR, Eurobor), you multiply by (days/360).

If you’re using an effective rate (e.g., the risk-free rate, Treasury rates), you raise to the power.

That’s what I thought…but in this problem from Schweser, they say Interest Rates but then Multiply

Yew Mun Yip has entered into a 90-day forward contract long CAD 1 million against AUD at a forward rate of 1.05358 AUD/CAD. Thirty days after initiation, the following AUD/CAD quotes are available: Maturit)’: FX Rate Spot 1.0612/1.0614 30-day +4.91+5.2 60-day +8.61+9.0 90-day +14.6/+16.8 180-day +42.3/+48.3 The following information is available (at t=30) for AUD interest rates: 30-day rate: 1.12% 60-day rate: 1.16% 90-day rate: 1.20% What is the mark-to-market value in AUD ofYip’s forward contract? = (1.06206 - 1.05358)(1,000,000) / [1+0.0116***(60/360)]**