In order to calculate please enter principal amount and interest rate details to the calculator below.
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What is interest?
It is the return received for the money lent to a place to operate. In the capitalist economy, the price of money as the modified form of surplus value means the rent value of the leased money. This concept forms the basis of financial mathematics.
How is interest calculated?
It is calculated by two different methods as simple and compound.
How is simple interest calculated?
It is the calculation of a certain rate of return on the principal for only one period. For example, when depositing USD 1000 with 1 year maturity and 10% annual interest, USD 100 will be obtained and total capital will be USD 1100.
It is calculated by the following formula.
Yield = Principal X (Interest Rate / 100) X Term
How is compound interest calculated?
According to the frequency of humidification, the profit at the end of each period is re-invested by adding the capital to the end of each term and each period is calculated according to the changing capitals. For example, when depositing USD 1000 with 2 years maturity, annual profit payment and 10% annual interest, USD TL will be obtained at the end of the first year and total capital will be USD 1100 with principal. If USD 1100 is invested again for the second year, USD 110 will be obtained and as a result, the total capital will be USD 1210.
The sum of principal and return at maturity is calculated by the following formula. The most important point to be considered in the formula is that the interest rate is compatible with the frequency of humidification. In other words, the ratio in this formula indicates the return to be obtained at the end of 1 period. For example; If 10% profit is obtained in 1 month period and total capital to be obtained at the end of 3 months is to be calculated, 10/100 should be written in the formula instead of rate and 3 in the number of periods.
Total Capital After Maturity = Principle X (1 + Interest Rate) Term