How to Compute Time Deposit Interest

Here is the "How to" on how to compute your earnings if you put your money in Time Deposit with the bank.  I remembered several months ago when I was hopping from one bank to another along Ayala Ave. seeking a bank that gives the highest interest rates returns.  Happy reading... 

Legend:

P = Present Value
m = 4 if quarterly, 12 if monthly
i = Interest rate
n = Number of years

Simple Formula:

InterestEarned = [PresentValue * InterestRate * (No. of days of maturity / No. of days in a year)] * (1 - 20%)

Actual Formula:

InterestEarned = [PresentValue [(1+i/m)^m-1]] * (1-20%) / m

Tax = (1-20%)



Example:

P = Php 100,000
Maturity date = 35 days
Interest rate = 2.5 %

Interest Earned = P * I * Maturity date / 365

Interest Earned = Php 100,000 * 0.025 * 35 / 365

Interest Earned = Php 239.00

But wait, there are still tax to be deducted,

If Tax = 20%

So,

Interest Earned = Php 239 * (1-20%)

Finally,

Interest Earned = Php 191.20 (your actual interest earned)


This is not yet fully furnished..........to be edited.......