Calculate the Due Simple Interest Earned by a Principal of 417.00 (Dollar, Euro, Pound). Annual Interest Rate: 2.25%. Duration Period: 1 year, 6 months and 5 days. Transaction Fee Rate: 0.15%
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 = 417.00 units (Dollar, Euro, Pound) - r = Annual simple interest rate
r = 2.25% - t = Duration period of the investment, in days
t = 1 year, 6 months and 5 days - t = 1 year × 360 days / year + 6 months × 30 days / month + 5 days
t = 545 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 =
(417.00 × 2.25% × 545) ÷ 360 =
417.00 × 2.25 ÷ 100 × 545 ÷ 360 =
(417.00 × 2.25 × 545) ÷ (360 × 100) =
511,346.25 ÷ 36,000 =
14.2040625 ≈
14.20
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 =
417.00 + 14.20 =
431.20
[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 | -- | -- | 417.00 |
| 1 | 30 | 0.78 | 0.78 | 417.78 |
| 2 | 30 | 0.78 | 1.56 | 418.56 |
| 3 | 30 | 0.78 | 2.34 | 419.34 |
| 4 | 30 | 0.78 | 3.13 | 420.13 |
| 5 | 30 | 0.78 | 3.91 | 420.91 |
| 6 | 30 | 0.78 | 4.69 | 421.69 |
| 7 | 30 | 0.78 | 5.47 | 422.47 |
| 8 | 30 | 0.78 | 6.25 | 423.25 |
| 9 | 30 | 0.78 | 7.03 | 424.03 |
| 10 | 30 | 0.78 | 7.82 | 424.82 |
| 11 | 30 | 0.78 | 8.60 | 425.60 |
| 12 | 30 | 0.78 | 9.38 | 426.38 |
| 13 | 30 | 0.78 | 10.16 | 427.16 |
| 14 | 30 | 0.78 | 10.94 | 427.94 |
| 15 | 30 | 0.78 | 11.72 | 428.72 |
| 16 | 30 | 0.78 | 12.51 | 429.51 |
| 17 | 30 | 0.78 | 13.29 | 430.29 |
| 18 | 30 | 0.78 | 14.07 | 431.07 |
| 19 | 5 | 0.13 | 14.20 | 431.20 |
| 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 =
0.15% × 431.20 =
0.15/100 × 431.20 =
(0.15 × 431.20)/100 =
64.68/100 =
64.68 ÷ 100 =
0.6468 ≈
0.65
[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 =
14.20 - 0.65 =
13.55
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 =
431.20 - 0.65 =
430.55
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 =
431.20 + 0.65 =
431.85
Answer:
Principal
417.00
Simple Interest Amount
14.20
Future Value
431.20
Transaction Fee Amount
0.65
Financial Gain (net profit)
13.55
Net Amount
430.55
Total Cost
431.85