How to compute the maturity value and interest amount earned on Fixed Deposit(FD)?
Fixed deposit is also called as term deposit or FD. It is a kind of saving offered by the banks for a fixed period of time. It is more beneficial than savings account. Another type of term deposit is recurring deposit. This tutorial will help you to learn how to calculate the maturity value you have earned with the fixed deposit and the amount earned on interest.
Formula for Fixed Deposit (FD):
A = P x (1 + r/n)nt
I = A - P
A = Maturity Value
P = Principal Amount
r = Rate of Interest
t = Number of Period
n = Compounded Interest Frequency
I = Interest Earned Amount
Step 1: Find the maturity value and the interest amount earned on a principal amount of Rs.80,000 deposited at 5 % for 6 years and compounded annually.
Principal Amount = Rs.80,000
Interest rate = 5 %
Number of Period = 6 years
Compounding Frequency = 1 (Annually)
Step 2: Substituting the values in the formula, we have
Maturity Value (A) = 80000 x [(1 + ((5/100) / 1)](6 x 1)
= 80000 x (1+0.05)6
= 80000 x (1.05)6
= 80000 x 1.34009
= Rs. 107207.65
Step 3: Substituting the maturity value in the interest amount formula,
Interest Earned Amount (I) = 107207.65 - 80000
I = Rs. 27207.65
Find maturity value and interest amount earned online using the Fixed Deposit (FD) Calculator
The calculation of maturity value varies for different values of Compounded Frequency and Number of Periods.
Here the Compounded Frequency is annually and n = 1, If the frequency is quarterly then use 4, for half yearly use 2 and for monthly use 12.
Here the Number of Terms is mentioned in years and hence t = 1, If it is mentioned in months use 12, for days use 365.