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10-11-2006, 03:56 PM #1
anybody know how to calculate how much
money i will make in interest on an account? The opening balance is 2400. The interest rate is 4.31%. The annual percentage yield is 4.40%. Interest is compounded/credited monthly. how much can i earn in one month with 2400? thanks for any info on how to calculate this!!!
10-11-2006, 04:12 PM #2
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I believe the total is $8.83
Here's an online calculator: math.about.com/library/blcompoundinterest.htm (I can't post a URl witout 15 posts, sorry - you'll have to copy/paste in your address bar)
If you want to know how much interest you will earn on your investment or if you want to know how much you will pay above the cost of the principal amount on a loan or mortgage, you will need to understand how compound interest works.
* Compound interest is paid on the original principal and on the accumulated past interest.
P is the principal (the initial amount you borrow or deposit)
r is the annual rate of interest (percentage)
n is the number of years the amount is deposited or borrowed for.
A is the amount of money accumulated after n years, including interest.
When the interest is compounded once a year:
A = P(1 + r)n
However, if you borrow for 5 years the formula will look like:
A = P(1 + r)5
This formula applies to both money invested and money borrowed.
Frequent Compounding of Interest:
What if interest is paid more frequently?
Here are a few examples of the formula:
Annually = P × (1 + r) = (annual compounding)
Quarterly = P (1 + r/4)4 = (quarterly compounding)
Monthly = P (1 + r/12)12 = (monthly compounding)
Last edited by MTS04; 10-11-2006 at 04:14 PM.
10-11-2006, 06:38 PM #3
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10-11-2006, 07:02 PM #4
10-12-2006, 09:04 PM #5
thank you so much for the links and information!!!
10-13-2006, 10:24 AM #6
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Thanks so much ladies. I opened an ING account a few weeks ago and I've been wondering how to calculate the interest too.
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