Calculate the Due Simple Interest Earned by a Principal of 602.00 (Dollar, Euro, Pound). Annual Interest Rate: 2.25%. Duration Period: 2 months and 1 day. 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 = 602.00 units (Dollar, Euro, Pound)
r = Annual simple interest rate
r = 2.25%
t = Duration period of the investment, in days
t = 2 months and 1 day
t = 2 months × 30 days / month + 1 day

t = 61 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 =

(602.00 × 2.25% × 61) ÷ 360 =

602.00 × 2.25 ÷ 100 × 61 ÷ 360 =

(602.00 × 2.25 × 61) ÷ (360 × 100) =

82,624.5 ÷ 36,000 =

2.295125 ≈

2.30

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 =

602.00 + 2.30 =

604.30

[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	--	--	602.00
1	30	1.13	1.13	603.13
2	30	1.13	2.26	604.26
3	1	0.04	2.30	604.30
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% × 604.30 =

^0.15/₁₀₀ × 604.30 =

^{(0.15 × 604.30)}/₁₀₀ =

^90.65/₁₀₀ =

90.65 ÷ 100 =

0.9065 ≈

0.91

[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 =

2.30 - 0.91 =

1.39

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 =

604.30 - 0.91 =

603.39

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 =

604.30 + 0.91 =

605.21

Answer:

Principal

602.00

Simple Interest Amount

2.30

Future Value

604.30

Transaction Fee Amount

0.91

Financial Gain (net profit)

1.39

Net Amount

603.39

Total Cost

605.21

More calculations on Simple (Flat Rate) Interest:

» Calculate the Simple Interest Amount and the Future Value (Amount Earned). Principal (Initial Amount): 554.00. Annual Interest Rate: 2.25%. Duration: 2 years 1 month and 8 days. Transaction Fee Rate: 0.15%

» Calculate the Simple Interest Amount and the Future Value (Amount Earned). Principal (Initial Amount): 650.00. Annual Interest Rate: 2.25%. Duration: 2 years 1 month and 8 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

When someone lends money to someone else, the borrower usually pays a fee to the lender. So the due interest is an amount of money paid or charged for the use of money or for borrowing money. The interest depends on:
1) the period length of the loan
2) the amount of money lent or borrowed (called principal)
3) the interest rate (the percentage of the principal charged as interest).
For example, for some bank deposits is not uncommon to pay an interest rate of 3.5% on the principal, annualy. That means that at the end of a one-year period the bank will repay not only the amount that was initially deposited, but also an additional amount, equal to the value resulting from the calculation: 3.5% × P, where P is the initial amount deposited, the principal.
Banks are also using these temporarily owned amounts of money by introducing them back into the cash flow circuit or are granting loans (for investments, for example) on which they are again charging interest.

The annual simple flat interest rate

The simple annual interest rate is simply the percentage of the principal charged as an interest for a period of one year, charged at the end of the period. An interest rate of r% tells us that for an amount of 100 (Dollar, Euro, Pound, Franc, Yen, ...), in one year, an amount of (r% out of 100) is earned as interest: I = r% × 100 units.
1. A deposit of an amount of money units P generates a one year simple interest of:
I = r% × P.
2. If the period for which the interest is calculated is two years, the interest accrued on a deposit of P money units is:
I = r% × P + r% × P = 2 × r% × P.
n. If the period for which the interest is calculated is n years, the interest accrued on a deposit of P money units is:
I = r% × P + r% × P + ... + r% × P = n × r% × P.
You can see that the amount accrued as interest, called simple interest, is added to the initial amount which earns interest, the amount borrowed or deposited, only at the end of the period of the deposit.
Simple interest is not an interest that earns interest on interest, as is the compound interest

>> Full article: simple interest