Calculate the Due Simple Interest Earned by a Principal of 468.00 (Dollar, Euro, Pound). Annual Interest Rate: 2.25%. Duration Period: 1 year, 5 months and 3 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 = 468.00 units (Dollar, Euro, Pound) - r = Annual simple interest rate
r = 2.25% - t = Duration period of the investment, in days
t = 1 year, 5 months and 3 days - t = 1 year × 360 days / year + 5 months × 30 days / month + 3 days
t = 513 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 =
(468.00 × 2.25% × 513) ÷ 360 =
468.00 × 2.25 ÷ 100 × 513 ÷ 360 =
(468.00 × 2.25 × 513) ÷ (360 × 100) =
540,189.00 ÷ 36,000 =
15.00525 ≈
15.01
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 =
468.00 + 15.01 =
483.01
[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 | -- | -- | 468.00 |
| 1 | 30 | 0.88 | 0.88 | 468.88 |
| 2 | 30 | 0.88 | 1.76 | 469.76 |
| 3 | 30 | 0.88 | 2.63 | 470.63 |
| 4 | 30 | 0.88 | 3.51 | 471.51 |
| 5 | 30 | 0.88 | 4.39 | 472.39 |
| 6 | 30 | 0.88 | 5.27 | 473.27 |
| 7 | 30 | 0.88 | 6.14 | 474.14 |
| 8 | 30 | 0.88 | 7.02 | 475.02 |
| 9 | 30 | 0.88 | 7.90 | 475.90 |
| 10 | 30 | 0.88 | 8.78 | 476.78 |
| 11 | 30 | 0.88 | 9.66 | 477.66 |
| 12 | 30 | 0.88 | 10.53 | 478.53 |
| 13 | 30 | 0.88 | 11.41 | 479.41 |
| 14 | 30 | 0.88 | 12.29 | 480.29 |
| 15 | 30 | 0.88 | 13.17 | 481.17 |
| 16 | 30 | 0.88 | 14.04 | 482.04 |
| 17 | 30 | 0.88 | 14.92 | 482.92 |
| 18 | 3 | 0.09 | 15.01 | 483.01 |
| 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% × 483.01 =
0.15/100 × 483.01 =
(0.15 × 483.01)/100 =
72.45/100 =
72.45 ÷ 100 =
0.7245 ≈
0.72
[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 =
15.01 - 0.72 =
14.29
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 =
483.01 - 0.72 =
482.29
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 =
483.01 + 0.72 =
483.73
Answer:
Principal
468.00
Simple Interest Amount
15.01
Future Value
483.01
Transaction Fee Amount
0.72
Financial Gain (net profit)
14.29
Net Amount
482.29
Total Cost
483.73