Calculate the Due Simple Interest Earned by a Principal of 1,035.00 (Dollar, Euro, Pound). Annual Interest Rate: 3.00%. Duration Period: 1 year, 2 months and 15 days. Transaction Fee Rate: 3.00%
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. Calculation formula:
I = (P × r × t) ÷ 360
[3] Simple interest. Used notations:
- I = Simple interest amount - To be calculated.
Amount accrued as simple interest on the amount lent, deposited or borrowed. - 360 = Number of days in a year
- P = Principal - initial starting amount lent, deposited or borrowed
P = 1,035.00 units (Dollar, Euro, Pound) - r = Annual simple interest rate
r = 3.00% - t = Duration period of the investment, in days
t = 1 year, 2 months and 15 days - t = 1 year × 360 days / year + 2 months × 30 days / month + 15 days
t = 435 days
» Simple Interest: what is it, how is it calculated?
Calculate the simple interest amount
[4] Substitute for the values
in the Simple Interest formula:
I =
(P × r × t) ÷ 360 =
(1,035.00 × 3.00% × 435) ÷ 360 =
1,035.00 × 3.00 ÷ 100 × 435 ÷ 360 =
(1,035.00 × 3.00 × 435) ÷ (360 × 100) =
1,350,675.00 ÷ 36,000 =
37.51875 ≈
37.52
The Future Value and Project Breakdown
[5] The Future Value (accumulated value) of the investment:
- F = The Future Value of the investment is calculated by adding the calculated simple interest amount to the principal.
- The Future Value of the investment is also called the accumulated value of the investment.
F = P + I =
1,035.00 + 37.52 =
1,072.52
[6] Project Breakdown. Monthly
The simple interest is evenly distributed along the months that make up the project
| Month | Days | Interest | Total interest | Balance |
|---|---|---|---|---|
| 0 | 0 | -- | -- | 1,035.00 |
| 1 | 30 | 2.59 | 2.59 | 1,037.59 |
| 2 | 30 | 2.59 | 5.18 | 1,040.18 |
| 3 | 30 | 2.59 | 7.76 | 1,042.76 |
| 4 | 30 | 2.59 | 10.35 | 1,045.35 |
| 5 | 30 | 2.59 | 12.94 | 1,047.94 |
| 6 | 30 | 2.59 | 15.53 | 1,050.53 |
| 7 | 30 | 2.59 | 18.11 | 1,053.11 |
| 8 | 30 | 2.59 | 20.70 | 1,055.70 |
| 9 | 30 | 2.59 | 23.29 | 1,058.29 |
| 10 | 30 | 2.59 | 25.88 | 1,060.88 |
| 11 | 30 | 2.59 | 28.46 | 1,063.46 |
| 12 | 30 | 2.59 | 31.05 | 1,066.05 |
| 13 | 30 | 2.59 | 33.64 | 1,068.64 |
| 14 | 30 | 2.59 | 36.23 | 1,071.23 |
| 15 | 15 | 1.29 | 37.52 | 1,072.52 |
| Month | Days | Interest | Total interest | Balance |
Transaction Fee Amount. Financial Gain (net profit)
[7] Amount charged as a Transaction Fee
- Fee = Transaction Fee Amount is calculated as a percentage of the Future Value.
- This percentage is called Fee Rate = Fee%.
Fee = Fee% × F
Fee =
Fee% × F =
3% × 1,072.52 =
3/100 × 1,072.52 =
(3 × 1,072.52)/100 =
3,217.56/100 =
3,217.56 ÷ 100 =
32.1756 ≈
32.18
[8] Financial Gain (net profit):
- Pr = Financial Gain (the net profit) is calculated as the difference between Simple Interest Amount, I, and Transaction Fee Amount, Fee.
Pr = I - Fee
Pr =
I - Fee =
37.52 - 32.18 =
5.34
Calculate the net amount left after deducting the Transaction Fee Amount
[9] Net Amount. Only in the case of a (bank) deposit
- N = The Net Value is calculated by subtracting the Fee Amount from the Future Value.
N = F - Fee
N =
F - Fee =
1,072.52 - 32.18 =
1,040.34
Calculate the Total Cost of borrowing
[10] Total Cost. Only in the case of a (bank) loan
- TC = The Total Cost of a borrowing is calculated by adding the Transaction Fee Amount to the Future Value.
TC = F + Fee
TC =
F + Fee =
1,072.52 + 32.18 =
1,104.70
Answer:
Principal
1,035.00
Simple Interest Amount
37.52
Future Value
1,072.52
Transaction Fee Amount
32.18
Financial Gain (net profit)
5.34
Net Amount
1,040.34
Total Cost
1,104.70