What is the simple interest on Rs 1500 at 2% interest rate for a period of 2 years?

Compound Interest: The future value (FV) of an investment of present value (PV) dollars earning interest at an annual rate of r compounded m times per year for a period of t years is:

FV = PV(1 + r/m)mtor

FV = PV(1 + i)n

where i = r/m is the interest per compounding period and n = mt is the number of compounding periods.

One may solve for the present value PV to obtain:

PV = FV/(1 + r/m)mt

Numerical Example: For 4-year investment of $20,000 earning 8.5% per year, with interest re-invested each month, the future value is

FV = PV(1 + r/m)mt   = 20,000(1 + 0.085/12)(12)(4)   = $28,065.30

Notice that the interest earned is $28,065.30 - $20,000 = $8,065.30 -- considerably more than the corresponding simple interest.

Effective Interest Rate: If money is invested at an annual rate r, compounded m times per year, the effective interest rate is:

reff = (1 + r/m)m - 1.

This is the interest rate that would give the same yield if compounded only once per year. In this context r is also called the nominal rate, and is often denoted as rnom.

Numerical Example: A CD paying 9.8% compounded monthly has a nominal rate of rnom = 0.098, and an effective rate of:

r eff =(1 + rnom /m)m   =   (1 + 0.098/12)12 - 1   =  0.1025.

Thus, we get an effective interest rate of 10.25%, since the compounding makes the CD paying 9.8% compounded monthly really pay 10.25% interest over the course of the year.

Mortgage Payments Components: Let where P = principal, r = interest rate per period, n = number of periods, k = number of payments, R = monthly payment, and D = debt balance after K payments, then

R = P � r / [1 - (1 + r)-n]

D = P � (1 + r)k - R � [(1 + r)k - 1)/r]

Accelerating Mortgage Payments Components: Suppose one decides to pay more than the monthly payment, the question is how many months will it take until the mortgage is paid off? The answer is, the rounded-up, where:

n = log[x / (x � P � r)] / log (1 + r)

Future Value (FV) of an Annuity Components: Ler where R = payment, r = rate of interest, and n = number of payments, then

FV = [ R(1 + r)n - 1 ] / r

Future Value for an Increasing Annuity: It is an increasing annuity is an investment that is earning interest, and into which regular payments of a fixed amount are made. Suppose one makes a payment of R at the end of each compounding period into an investment with a present value of PV, paying interest at an annual rate of r compounded m times per year, then the future value after t years will be

FV = PV(1 + i)n + [ R ( (1 + i)n - 1 ) ] / i where i = r/m is the interest paid each period and n = m � t is the total number of periods.

Numerical Example: You deposit $100 per month into an account that now contains $5,000 and earns 5% interest per year compounded monthly. After 10 years, the amount of money in the account is:

FV = PV(1 + i)n + [ R(1 + i)n - 1 ] / i =
5,000(1+0.05/12)120 + [100(1+0.05/12)120 - 1 ] / (0.05/12) = $23,763.28

Value of a Bond:

V is the sum of the value of the dividends and the final payment.

You may like to perform some sensitivity analysis for the "what-if" scenarios by entering different numerical value(s), to make your "good" strategic decision.

Replace the existing numerical example, with your own case-information, and then click one the Calculate.

Investments earned on a scheme are calculated as gains accumulated against the interest accumulated. Such gains are compiled in either compound or simple interest. Interest is calculated on the principal amount.

Calculating the amount that you will gain after a certain period based on the interest is vital. If your investment accumulates funds based on the simple interest you can use a simple interest calculator. These calculators help you easily compute the total amount of funds you will be able to generate on maturity.

Simple Interest Formula

To calculate Total Maturity Amount Value:

The simple interest formula for the calculator which is utilized to compute the overall gains accumulated is represented as:

A = P(1 + rt)

here:

A represents the Total accumulated Amount (principal + interest)
P represents the Principal Amount
r represents the Rate of Interest per year in decimal; r = R/100
t represents the Time Period (months or years)

To calculate the Interest on the Investments and loans

SI= P X RX T/100

In it, the variables represent the following –

Groww SI calculator uses this formula to help easily determine interest rates and gauge the increase in the value of the initial investment. Let’s understand it with the help of an instance.

Mr. A has invested an amount of Rs. 15000 at an interest rate of 5% for almost 2 years. So his SI will be calculated as Rs. (15000 X 5 X 2/100) which is equal to Rs.16500.

What is the Simple Interest Formula and when is it Used?

The amount one needs to pay or receive after a certain tenure base based on the interest can be calculated using the Simple Interest Formula. It is the best and simple method of calculating interest on the principal amount and should be used:

• When one has borrowed money: To repay extra payment of interest along with the borrowed amount. The formula for simple interest can help to calculate the borrowing cost as Interest.
• When someone lends money: If someone has given money to someone to earn Interest Income in exchange. By using the Simple Interest formula, one can easily get the extra income figure as the Interest.
• When someone has invested money: If someone has invested their surplus money in deposits such as FD, RD or savings schemes like SSY, PPF or others, can also calculate the Interest Income with a simple interest calculator.

How to Calculate Simple Interest using Calculator?

For individuals who are confused regarding the gains that they will accumulate once the maturity period is over, a simple interest EMI calculator is the only option.  Just enter the principal, rate and time value and the result will be calculated within seconds. 

How can Simple Interest Calculator help you?

It is regarded as the best computing device to determine the value of money gain over the tenure of investment. Users will know how much interest they will earn. Its simplified nature and accuracy have increased the demand for a simple interest rate calculator recently. The principal amount is constant when calculating a simple interest rate. This indicates the fact that interest is levied on principal remains the same for the consecutive tenure.

• This simple interest calculator offers you output by calculating both principals as well as interest.
• Although it is easy to calculate simple interest for shorter tenors but for long consecutive years, a manual mechanism increases the chances of mistakes. So, use an online simple interest calculator for accurate calculation.

• Quick and easy way to gain insight into interest as well as the increase in the invested capital.

Advantages of using Simple Interest Calculators

There are times when borrowers, depending on the manual method, people pay unpaid interest before principal. This situation leads to issues during computing simple interest on an amount. Following are some of the advantages of switching to an online calculator from the manual method.

• SI is computed irrespective of any unit. Be it dollar, euro or any other currency, it calculates effectively.
• Users who intend to save time on calculating interest rates with changing years can save their time with its judicious use.
• Numerous variables are available to help you gauge your total investment. So, knowing about the total return and maturity time helps you to take viable decisions.
• A simple interest loan calculator helps in determining the current value of money.

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