When deciding whether to invest in a bank, the most important criterion is the interest rate. The future amount of the deposit will depend on its value. All other things being equal, the choice of a particular banking product will depend only on interest. Knowing it, you can easily calculate the amount of the deposit at the end of the contract.
Instructions
Step 1
In terms of the degree of influence on the final amount of the deposit, the most important of all conditions is the capitalization of interest. Capitalization is an option for calculating interest, in which interest is added to the amount of the initial investment. Thus, with each accrual of interest, the contribution becomes larger. In the next period (usually a month), interest is charged on the accrued amount. So if you want to calculate the deposit amount at the end of the contract, you should take into account the following conditions:
• Interest rate;
• Capitalization (including the frequency of interest accrual);
• Contract time;
• Replenishment of the deposit (if necessary).
Step 2
The easiest way to calculate the amount of the deposit is to use the profitability calculators, of which there are a lot on the Internet now. Enter the placement period, deposit amount and interest rate in the special fields. Also indicate the frequency of capitalization, if any, and the planned replenishment, if it is also necessary.
Step 3
If you are interested in understanding the mathematical basics of calculating interest and calculating the deposit amount yourself, you will need two formulas:
• For deposits without capitalization with interest accrued at the end of the term - the formula of simple interest.
• For deposits with capitalization - compound interest formula.
The main variables in both formulas are the same: the initial deposit amount, the interest rate (expressed in shares), the number of accrual periods and the term of the contract.
