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Learn about fixed deposit and how to find the maturity value of FD
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What is Fixed Deposit? • A savings scheme provided by banks, where the investors will gain a higher interest rate untill the maturity period. • It is also called as “Term deposit” or “time deposit.
Why Fixed Deposit? This may be one of the savings benefit provided by banks, but the difference is that the interest rates are higher than any other savings account, which gains the user with high maturity value at the end of the maturity period.
What is Maturity Value? • The amount of money that you receive after the invested period of your initial amount is called as maturity value.
How to Find Maturity Value in FD? • The formula to calculate the maturity value is • Maturity Value = P x (1 + r/n)^nt • P = Principal Amount • r = Rate of Interest • t = Number of Period • n = Compounded Interest Frequency
How to Find Maturity Value • If you have invested Rs. 1,00,000 in a bank for 3 years with interest rate of 5 %, that is compounded half yearly, then your maturity value will be • = 100000 x (1 + (5/100)*2)2x3 • = 115762.5
Compounding Frequency • While calculating maturity value, each compounding fequency takes different values. • Annually = 1 • Half Yearly = 2 • Quarterly = 4 • Monthly = 12 • Simple Interest Based = 0
Interest Earned till Maturity Value • The interest earned is the greatest benefit in the fixed deposit savings. • To find the interest earned, use the formula • Interest Earned Amount = Maturity Value - Principal Amount • Hence your interest earned will be 115762.5 – 100000 which is Rs. 15969.34
Fixed Deposit Calculation Online • If it is really a tuf task to perform the calculations to find your maturity value, there are even more online fixed deposit calculator. • Just enter the values and a click will give your savings benefits.