Calculate the Due Simple Interest Earned by a Principal of 425.00 (Dollar, Euro, Pound). Annual Interest Rate: 2.25%. Duration Period: 1 year, 11 months and 16 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 = 425.00 units (Dollar, Euro, Pound) - r = Annual simple interest rate
r = 2.25% - t = Duration period of the investment, in days
t = 1 year, 11 months and 16 days - t = 1 year × 360 days / year + 11 months × 30 days / month + 16 days
t = 706 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 =
(425.00 × 2.25% × 706) ÷ 360 =
425.00 × 2.25 ÷ 100 × 706 ÷ 360 =
(425.00 × 2.25 × 706) ÷ (360 × 100) =
675,112.5 ÷ 36,000 =
18.753125 ≈
18.75
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 =
425.00 + 18.75 =
443.75
[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 | -- | -- | 425.00 |
| 1 | 30 | 0.80 | 0.80 | 425.80 |
| 2 | 30 | 0.80 | 1.59 | 426.59 |
| 3 | 30 | 0.80 | 2.39 | 427.39 |
| 4 | 30 | 0.80 | 3.19 | 428.19 |
| 5 | 30 | 0.80 | 3.98 | 428.98 |
| 6 | 30 | 0.80 | 4.78 | 429.78 |
| 7 | 30 | 0.80 | 5.58 | 430.58 |
| 8 | 30 | 0.80 | 6.37 | 431.37 |
| 9 | 30 | 0.80 | 7.17 | 432.17 |
| 10 | 30 | 0.80 | 7.97 | 432.97 |
| 11 | 30 | 0.80 | 8.76 | 433.76 |
| 12 | 30 | 0.80 | 9.56 | 434.56 |
| 13 | 30 | 0.80 | 10.36 | 435.36 |
| 14 | 30 | 0.80 | 11.15 | 436.15 |
| 15 | 30 | 0.80 | 11.95 | 436.95 |
| 16 | 30 | 0.80 | 12.75 | 437.75 |
| 17 | 30 | 0.80 | 13.54 | 438.54 |
| 18 | 30 | 0.80 | 14.34 | 439.34 |
| 19 | 30 | 0.80 | 15.14 | 440.14 |
| 20 | 30 | 0.80 | 15.93 | 440.93 |
| 21 | 30 | 0.80 | 16.73 | 441.73 |
| 22 | 30 | 0.80 | 17.53 | 442.53 |
| 23 | 30 | 0.80 | 18.33 | 443.33 |
| 24 | 16 | 0.42 | 18.75 | 443.75 |
| 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% × 443.75 =
0.15/100 × 443.75 =
(0.15 × 443.75)/100 =
66.56/100 =
66.56 ÷ 100 =
0.6656 ≈
0.67
[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 =
18.75 - 0.67 =
18.08
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 =
443.75 - 0.67 =
443.08
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 =
443.75 + 0.67 =
444.42
Answer:
Principal
425.00
Simple Interest Amount
18.75
Future Value
443.75
Transaction Fee Amount
0.67
Financial Gain (net profit)
18.08
Net Amount
443.08
Total Cost
444.42