Calculate the Due Simple Interest Earned by a Principal of 501.10 (Dollar, Euro, Pound). Annual Interest Rate: 2.25%. Duration Period: 3 years, 8 months and 14 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 = 501.10 units (Dollar, Euro, Pound)
  • r = Annual simple interest rate
    r = 2.25%
  • t = Duration period of the investment, in days
    t = 3 years, 8 months and 14 days
  • t = 3 years × 360 days / year + 8 months × 30 days / month + 14 days

    t = 1,334 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 =

(501.10 × 2.25% × 1,334) ÷ 360 =

501.10 × 2.25 ÷ 100 × 1,334 ÷ 360 =

(501.10 × 2.25 × 1,334) ÷ (360 × 100) =

1,504,051.65 ÷ 36,000 =

41.7792125 ≈

41.78


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 =

501.10 + 41.78 =

542.88


[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 -- -- 501.10
1 30 0.94 0.94 502.04
2 30 0.94 1.88 502.98
3 30 0.94 2.82 503.92
4 30 0.94 3.76 504.86
5 30 0.94 4.70 505.80
6 30 0.94 5.64 506.74
7 30 0.94 6.58 507.68
8 30 0.94 7.52 508.62
9 30 0.94 8.46 509.56
10 30 0.94 9.40 510.50
11 30 0.94 10.34 511.44
12 30 0.94 11.27 512.37
13 30 0.94 12.21 513.31
14 30 0.94 13.15 514.25
15 30 0.94 14.09 515.19
16 30 0.94 15.03 516.13
17 30 0.94 15.97 517.07
18 30 0.94 16.91 518.01
19 30 0.94 17.85 518.95
20 30 0.94 18.79 519.89
21 30 0.94 19.73 520.83
22 30 0.94 20.67 521.77
23 30 0.94 21.61 522.71
24 30 0.94 22.55 523.65
25 30 0.94 23.49 524.59
26 30 0.94 24.43 525.53
27 30 0.94 25.37 526.47
28 30 0.94 26.31 527.41
29 30 0.94 27.25 528.35
30 30 0.94 28.19 529.29
31 30 0.94 29.13 530.23
32 30 0.94 30.07 531.17
33 30 0.94 31.01 532.11
34 30 0.94 31.95 533.05
35 30 0.94 32.89 533.99
36 30 0.94 33.82 534.92
37 30 0.94 34.76 535.86
38 30 0.94 35.70 536.80
39 30 0.94 36.64 537.74
40 30 0.94 37.58 538.68
41 30 0.94 38.52 539.62
42 30 0.94 39.46 540.56
43 30 0.94 40.40 541.50
44 30 0.94 41.34 542.44
45 14 0.44 41.78 542.88
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% × 542.88 =

0.15/100 × 542.88 =

(0.15 × 542.88)/100 =

81.43/100 =

81.43 ÷ 100 =

0.8143 ≈

0.81


[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 =

41.78 - 0.81 =

40.97


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 =

542.88 - 0.81 =

542.07


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 =

542.88 + 0.81 =

543.69

Answer:

Principal
501.10
Simple Interest Amount
41.78
Future Value
542.88
Transaction Fee Amount
0.81
Financial Gain (net profit)
40.97
Net Amount
542.07
Total Cost
543.69

More calculations on Simple (Flat Rate) Interest:

» Calculate the Simple Interest Amount and the Future Value (Amount Earned). Principal (Initial Amount): 461.10. Annual Interest Rate: 2.25%. Duration: 4 months and 12 days. Transaction Fee Rate: 0.15%

» Calculate the Simple Interest Amount and the Future Value (Amount Earned). Principal (Initial Amount): 541.10. Annual Interest Rate: 2.25%. Duration: 4 months and 12 days. Transaction Fee Rate: 0.15%

Calculate simple flat rate interest on a principal borrowed, lent

Simple Interest Amount = (Principal × Annual Simple Interest Rate × Duration in days) ÷ Number of days in a year



Simple flat rate interest.

Interest

The annual simple flat interest rate

>> Full article: simple interest