Calculate the Due Simple Interest Earned by a Principal of 3,550.00 (Dollar, Euro, Pound). Annual Interest Rate: 2.00%. Duration Period: 2 years, 3 months and 11 days. Transaction Fee Rate: 5.00%
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 = 3,550.00 units (Dollar, Euro, Pound) - r = Annual simple interest rate
r = 2.00% - t = Duration period of the investment, in days
t = 2 years, 3 months and 11 days - t = 2 years × 360 days / year + 3 months × 30 days / month + 11 days
t = 821 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 =
(3,550.00 × 2.00% × 821) ÷ 360 =
3,550.00 × 2.00 ÷ 100 × 821 ÷ 360 =
(3,550.00 × 2.00 × 821) ÷ (360 × 100) =
5,829,100.00 ÷ 36,000 ≈
161.919444444444 ≈
161.92
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 =
3,550.00 + 161.92 =
3,711.92
[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 | -- | -- | 3,550.00 |
| 1 | 30 | 5.92 | 5.92 | 3,555.92 |
| 2 | 30 | 5.92 | 11.83 | 3,561.83 |
| 3 | 30 | 5.92 | 17.75 | 3,567.75 |
| 4 | 30 | 5.92 | 23.67 | 3,573.67 |
| 5 | 30 | 5.92 | 29.58 | 3,579.58 |
| 6 | 30 | 5.92 | 35.50 | 3,585.50 |
| 7 | 30 | 5.92 | 41.42 | 3,591.42 |
| 8 | 30 | 5.92 | 47.33 | 3,597.33 |
| 9 | 30 | 5.92 | 53.25 | 3,603.25 |
| 10 | 30 | 5.92 | 59.17 | 3,609.17 |
| 11 | 30 | 5.92 | 65.08 | 3,615.08 |
| 12 | 30 | 5.92 | 71.00 | 3,621.00 |
| 13 | 30 | 5.92 | 76.92 | 3,626.92 |
| 14 | 30 | 5.92 | 82.83 | 3,632.83 |
| 15 | 30 | 5.92 | 88.75 | 3,638.75 |
| 16 | 30 | 5.92 | 94.67 | 3,644.67 |
| 17 | 30 | 5.92 | 100.58 | 3,650.58 |
| 18 | 30 | 5.92 | 106.50 | 3,656.50 |
| 19 | 30 | 5.92 | 112.42 | 3,662.42 |
| 20 | 30 | 5.92 | 118.33 | 3,668.33 |
| 21 | 30 | 5.92 | 124.25 | 3,674.25 |
| 22 | 30 | 5.92 | 130.17 | 3,680.17 |
| 23 | 30 | 5.92 | 136.08 | 3,686.08 |
| 24 | 30 | 5.92 | 142.00 | 3,692.00 |
| 25 | 30 | 5.92 | 147.92 | 3,697.92 |
| 26 | 30 | 5.92 | 153.83 | 3,703.83 |
| 27 | 30 | 5.92 | 159.75 | 3,709.75 |
| 28 | 11 | 2.17 | 161.92 | 3,711.92 |
| 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 =
5% × 3,711.92 =
5/100 × 3,711.92 =
(5 × 3,711.92)/100 =
18,559.6/100 =
18,559.6 ÷ 100 =
185.596 ≈
185.60
[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 =
161.92 - 185.60 =
- 23.68
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 =
3,711.92 - 185.60 =
3,526.32
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 =
3,711.92 + 185.60 =
3,897.52
Answer:
Principal
3,550.00
Simple Interest Amount
161.92
Future Value
3,711.92
Transaction Fee Amount
185.60
Financial Gain (net profit)
- 23.68
Net Amount
3,526.32
Total Cost
3,897.52