1. Input Details
You need to provide the following details:
- Principal Amount (P): The initial amount you want to invest.
- Tenure (T): The duration of the deposit, usually in months or years.
- Interest Rate (R): The annual interest rate offered by the bank or financial institution.
- Compounding Frequency: How often the interest is compounded, such as yearly, half-yearly, quarterly, or monthly.
2. Calculation Method
The FD Calculator uses the formula for compound interest to calculate the maturity amount and the interest earned. The formula is:
Maturity Amount=P×(1+Rn)nT\text{Maturity Amount} = P \times \left(1 + \frac{R}{n}ight)^{nT}Maturity Amount=P×(1+nR)nT
Where:
- PPP = Principal Amount
- RRR = Annual Interest Rate (as a decimal, e.g., 5% = 0.05)
- nnn = Number of times the interest is compounded per year (e.g., 4 for quarterly, 12 for monthly)
- TTT = Tenure of the deposit in years
3. Output
The calculator provides the following results:
- Maturity Amount: The total amount you will receive at the end of the tenure, including the principal and the interest earned.
- Total Interest Earned: The difference between the maturity amount and the principal amount, representing the interest earned over the tenure.
Example
For instance, if you invest $10,000 in an FD for 5 years at an annual interest rate of 5%, compounded quarterly, the calculation would be:
- Principal (P) = $10,000
- Tenure (T) = 5 years
- Annual Interest Rate (R) = 5% or 0.05
- Compounding Frequency (n) = 4 (quarterly)
Using the formula, you can find the maturity amount and total interest earned.
This calculator helps investors understand the potential returns on their fixed deposits, enabling better financial planning and investment decisions.
