Cumulative deposit interest amount calculation formula and representative example

Daily interest calculation is done with the following formula:

Principal amount is the total deposit balance of the given day. Principal amount can contain initial deposit amount, capitalized interest amount (for cumulative deposits), cumulative deposit periodic instalments amount (for cumulative deposits).

 

Interest rate is the annual nominal interest rate defined for the specific deposit type and period.

 

Representative example:

  • Initial deposit amount - AMD100,000
  • Monthly instalment amount - AMD10,000
  • Date of first installment - 01.06.2018
  • Total number of instalments - 17
  • Deposit term -36 months
  • Annual interest rate - 7.50%
  • Interest payment instruction - interest accumulation on monthly basis
  • Number of days in the reporting year - 365/366
  • Start date - 01.05.2018
  • Maturity date - 30.04.2021

 

Calculation of cumulative term deposit maturity amount

Interest at maturity1 = AMD 55,739

Income tax 10% from interest amount = 55,739 x 10% = 5,574

Net interest amount paid = 55,739 - 5,574 = 50,165

Deposit amount at maturity (deposit principal + net interest calculated and paid on principal amount + net interest calculated and paid on capitalized interest) = 100,000 + 17 x 10,000 + 50,165 = 320,165

Annual percentage yield will comprise to 7.76%. 

1Interest is calculated from start date of the deposit up until the date of maturity (interest is not calculated on the actual day of maturity).

Last updated on: 30/7/2019 06:09:01