## Fixed Deposit Amount Calculator

The fixed Deposit amount calculator calculates the maturity amount along with the compounded interest that would have earned either monthly, quarterly, semi-annually, or annually.

#### Fixed Deposit Rate of Interest

P x ( 1 + r/N )^{nxN}

- P is the Principal amount that is invested initially
- r is the fixed rate of interest
- N is the frequency of interest being paid
- n is the number of periods for which investment shall be made

The formula for calculating this is per below:

Mathematically it can be calculated: A=P*(1+r/N)^{n*N}

Wherein,

- A is the total maturity amount
- P is the Principal amount that is invested initially
- r is the fixed rate of interest
- N is the frequency of interest is paid
- n is the number of periods for which investment shall be made.

### About Fixed Deposit Calculator

This calculator can be used to calculate the amount of interest that shall be earned on the amount invested for a particular period. This calculator will provide us with the maturity amount at the end of the investment period. The interest could be paid either monthly, quarterly, semi-annually, or annually, and accordingly, the calculation needs to be made. This calculator can be used only if there is interest payment, which is compounded and not simple interest.

### How to Calculate Fixed Deposit Maturity Amount?

One needs to follow the below steps to calculate Fixed Deposit Maturity Amount

**Determine the initial amount which is supposed to be invested, which shall be your Principal amount.****Figure out the rate of interest that is being provided on the investment amount and the frequency of the same being paid, which shall be N.****Now, determine the period for which it shall be invested.****Divide the rate of interest by appropriate value depending upon the frequency. For example, if the rate of interest is 5% and it pays semi-annually, then the rate of interest would be 5%/2, which is 2.5%.****Now multiply the principal amount by a compounded rate of interest.****The resultant figure will be the maturity amount.**

### Fixed Deposit Calculator Examples

#### Example #1

Bank Abu is one of the biggest banks in the country XYZ. It operates in multiple business-like commercial loans, corporate loans, overdraft facilities, overseas funding, locker facilities, etc. it has been in existing for almost 35 years now. One of the best products of the company is its fixed deposit. Customers are happy with the product as it provides the highest rate in the country. The interest rate differs for all the maturities. Below are the details for same:

Mr. Umesh is interested in investing $100,000 for a period of 5 years. The bank pays interest quarterly. Based on the given information, you are required to compute the compounded interest as well the amount that Mr. Umesh will receive at the end of the maturity period.

**Solution:**

We are given the below details:

- P = $100,000
- R = Rate of interest, which is 7.50% that is applicable for a period of 5 years
- N = Frequency which is quarterly here; hence it will be 4
- n = number of years the investment proposed to be made, which is 5 years here.

Now, we can use the below formula to calculate the maturity amount.

**A = P x ( 1 + r/N ) ^{nxN}**

= 100,000 x ( 1 + 7.50 / (4 x 100 ) )^{4 x 5}

= 100,000 x ( 1.0188)^{20}

= 144,994.80

**Compounded interest will be:**

Compounded interest amount = 144,994.80 – 100,000 which shall be 44,994.80

#### Example #2

Mr. Seth is confused as to what period should he invest in and what product should he select from the below products. He wants to invest $50,000.

Sr No | Particulars | Product I | Product II | Product III |
---|---|---|---|---|

1 | Principal Amount | 50,000.00 | 50,000.00 | 50,000.00 |

2 | Rate of Interest | 9.60% | 9.50% | 9.45% |

3 | Frequency in Months | Semi-Annually | Quarterly | Monthly |

Based on the above information, you are required to advise Mr. Seth as to which product he should select?

**Solution:**

We are given the below details:

#### Product I

- P = $50,000
- R = Rate of interest, which is 9.60% that is applicable for a period of 10 years
- N = Frequency which is semi-annually here, hence it will be 2
- n = number of years the investment proposed to be made, which is 10 years here.

Now, we can use the below formula to calculate the maturity amount.

**A = P*(1+r/N) ^{n*N}**

= 50,000 x ( 1 + 9.60 / (2 x 100 ) )^{2 x 10}

= 100,000 x ( 1.048)^{20}

= 127,701.40

**Compounded Interest will be:**

Compounded interest amount = 127,701.40 – 50,000 which shall be 77,701.40

#### Product II

- P = $50,000
- R = Rate of interest which is 9.50% that is applicable for a period of 9 years
- N = Frequency which is Quarterly here, hence it will be 4
- n = number of years the investment proposed to be made which is 9 years here.

Now, we can use the below formula to calculate the maturity amount.

**A = P*(1+r/N) ^{n*N}**

= 50,000 x ( 1 + 9.60 / (2 x 100 ) )^{9 x 4}

= 50,000 x ( 1.0238)^{36}

= 116,399.45

**Compounded Interest will be:**

Compounded interest amount = 116,399.45 – 50,000 which shall be 66,399.45

#### Product III

- P = $50,000
- R = Rate of interest which is 9.45% that is applicable for a period of 9 years
- N = Frequency which is Quarterly here, hence it will be 12
- n = number of years the investment proposed to be made which is 9 years here.

Now, we can use the below formula to compute the maturity amount.

**A = P*(1+r/N) ^{n*N}**

= 50,000 x ( 1 + 9.45 / (12 x 100 ) )^{9 x 12}

= 50,000 x ( 1.0079)^{108}

= 116,651.59

**Compounded Interest will be:**

Compounded interest amount = 116,651.59 – 50,000 which shall be 66,651.59

**Hence, Mr. Seth should invest in product I to maximize wealth.**

### Conclusion

This calculator can be used to compare different fixed deposit schemes, and accordingly, the one that maximizes wealth will be chosen. Further, this calculator also depicts how the compounded works and how the amount increases

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