Calculation method used. Calculation formula. Used notations
[1] Calculation method used: 30 / 360
Number of days in a month = 30
Number of days in a year = 360
[2] Simple interest, I
Calculation formula:
I =
(P × r × t) ÷ 360
I = Simple interest amount
360 = Number of days in a year
P = Principal (initial amount)
P = 1,000.00 units (Dollar, Euro, Pound, etc.)
r = Annual simple interest rate, r = 4.50%
t = Duration of the investment, in days
t = 7 months and 20 days
t =
+ 7 months × 30 days / month
+ 20 days
t = 230 days
Calculate the simple interest amount
[3] Substitute for the values
in the Simple Interest formula:
I =
(P × r × t) ÷ 360 =
(1,000.00 × 4.50% × 230) ÷ 360 =
1,000.00 × 4.50 ÷ 100 × 230 ÷ 360 =
(1,000.00 × 4.50 × 230) ÷ (360 × 100) =
1,035,000.00 ÷ 36,000 =
28.75
[4] V = Amount earned:
V = P + I =
1,000.00 + 28.75 =
1,028.75