Fixed Deposits are a significant mode to invest for those who value security more than returns. This tutorial explains you how to calculate the maturity value and interest earned from FD.
An amount of Rs.15000 is deposited in a bank for 2 years and paying an annual interest rate of 5%, compounded quarterly.
Principal Amount (P) = Rs.15000 Rate of Interest Amount (r) = 5% = 0.05 Number of Period (t) = 2 years Compounded Interest (n) = 4 (quarterly)
Fixed Deposit (FD)
Maturity Value (A) = P x (1 + r/n)nt = 15000 x (1 + 0.05/4)4x2 = 15000 x (1 + 0.0125)8 = 15000 x (1.0125)8 = 15000 x 1.104486101 Maturity Value (A) = Rs. 16567.29
Interest Earned Amount (I) = A - P = 16567.29 - 15000 Interest Earned Amount (I) = Rs. 1567.29
Maturity Value (FD) = Rs. 16567.29 Interest Earned Amount (I) = Rs. 1567.29