Fixed Deposit Amount Calculator
The fixed Deposit amount calculator calculates the maturity amount along with the compounded interest that would have been earned either monthly, quarterly, semi-annually, or annually.
Fixed Deposit Rate of Interest
P x ( 1 + r/N )nxN
- P is the Principal amount that is invested initially
- r is the fixed rate of interest
- N is the frequency of interest being paid
- n is the number of periods for which investment shall be made
The formula for calculating this is below:
Mathematically it can be calculated: A=P*(1+r/N)n*N
Wherein,
- A is the total maturity amountP is the Principal amount that is invested initiallyr is the fixed rate of interestN is the frequency of interest is paidn is the number of periods for which investment shall be made.
About Fixed Deposit Calculator
This calculator can calculate the amount of interest that shall be earned on the amount invested for a particular period. This calculator will provide us with the maturity amount at the end of the investment period. The interest could be paid either monthly, quarterly, semi-annually, or annually; accordingly, the calculation needs to be made. This calculator can be used only if there is interest payment, which is compounded and not simple interest.
How to Calculate Fixed Deposit Maturity Amount?
Fixed Deposit Calculator Examples
Example #1
Bank Abu is one of the biggest banks in the country, XYZ. It has existed for almost 35 years. It operates in multiple business-like commercial loans, corporate loans, overdraft facilitiesOverdraft FacilitiesOverdraft is a banking facility that offers short-term credit to the account holders by allowing them to withdraw money from their savings or current account even if their account balance is or below zero. Its authorized limit differs from customer to customer.read more, overseas funding, locker facilities, etc. it has been in existing for almost 35 years now. overseas funding, locker facilities, etc. One of the best products of the company is its fixed deposit. Customers are happy with the product as it provides the highest rate in the country. The interest rate differs for all the maturities. Below are the details for the same:
- Determine the initial amount which is supposed to be invested, which shall be your Principal amount. Figure out the interest rate on the investment amount and the frequency of the same being paid, which shall be N. Now, determine the period for which it shall be invested. Divide the rate of interest by the appropriate value depending upon the frequency. For example, if the interest rate is 5% and paid semi-annually, the interest rate would be 5%/2, which is 2.5%. Now multiply the principal amount by a compounded rate of interest. The resultant figure will be the maturity amount.
Mr. Umesh is interested in investing $100,000 for five years. The bank pays interest quarterly. Based on the given information, you must compute the compounded interest and the amount Mr. Umesh will receive at the end of the maturity period.
Solution:
We are given the below details:
- P = $100,000R = Rate of interest, which is 7.50% that is applicable for five yearsN = Frequency which is quarterly here; hence it will be 4n = number of years the investment proposed to be made, which is five years here.
Now, we can use the below formula to calculate the maturity amount.
A = P x ( 1 + r/N )nxN
= 100,000 x ( 1 + 7.50 / (4 x 100 ) )4 x 5
= 100,000 x ( 1.0188)20
= 144,994.80
Compounded interest will be:
Compounded interest amount = 144,994.80 – 100,000 which shall be 44,994.80
Example #2
Mr. Seth is confused about what period he should invest in and what product he should select from the below products. He wants to invest $50,000.
Based on the above information, you must advise Mr. Seth on which product he should select.
Product I
- P = $50,000R = Rate of interest, which is 9.60%, is applicable for ten yearsN = Frequency which is semi-annually here; hence it will be 2n = number of years the investment proposed to be made, which is ten years here.
A = P*(1+r/N)n*N
= 50,000 x ( 1 + 9.60 / (2 x 100 ) )2 x 10
= 100,000 x ( 1.048)20
= 127,701.40
Compounded Interest will be:
Compounded interest amount = 127,701.40 – 50,000 which shall be 77,701.40
Product II
- P = $50,000R = Rate of interest, which is 9.50% that is applicable for nine yearsN = Frequency which is Quarterly here; hence it will be 4n = number of years the investment proposed to be made, which is nine years here.
= 50,000 x ( 1 + 9.60 / (2 x 100 ) )9 x 4
= 50,000 x ( 1.0238)36
= 116,399.45
Compounded interest amount = 116,399.45 – 50,000 which shall be 66,399.45
Product III
- P = $50,000R = Rate of interest, which is 9.45% that is applicable for nine yearsN = Frequency which is Quarterly here; hence it will be 12n = number of years the investment proposed to be made, which is nine years here.
Now, we can use the below formula to compute the maturity amount.
= 50,000 x ( 1 + 9.45 / (12 x 100 ) )9 x 12
= 50,000 x ( 1.0079)108
= 116,651.59
Compounded interest amount = 116,651.59 – 50,000 which shall be 66,651.59
Hence, Mr. Seth should invest in product I to maximize wealth.
Conclusion
This calculator can be used to compare different fixed deposit schemes; accordingly, the one that maximizes wealthMaximizes WealthWealth maximization means the maximization of the shareholder’s wealth as a result of an increase in share price thereby increasing the market capitalization of the company. The share price increase is a direct function of how competitive the company is, its positioning, growth strategy, and how it generates profits.read more will be chosen. Further, this calculator also depicts how the compound works and how the amount increases.
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This has been a Guide to Fixed Deposit Calculator. Here we provide you with the calculator used to calculate the fixed deposit maturity amount, along with step-by-step examples. You may learn more about banking from the following articles –
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