The calculation process is as follows:
Annual interest rate 12%, monthly interest rate 1%. Five years is 5× 12=60 months.
20× (1+1%) 60 = 363,934 (ten thousand yuan)
A×( 1+ monthly interest rate) months is the principal plus interest formula for calculating how many months of compound interest.
Extended data:
The calculation of compound interest is to calculate the principal and the generated interest together, which is profitable.
The characteristic of compound interest calculation is that the sum of the principal and interest at the end of the previous period is taken as the principal of the next period, and the principal amount of each period is different when calculating. The formula of compound interest is: a×( 1+ monthly interest rate) months.
The present value of compound interest refers to the principal that must be invested now in order to reach a certain amount of funds in the future under the condition of calculating compound interest. The so-called compound interest, also called rolling interest in Galilee, refers to the method of making a new round of investment with interest after a deposit or investment is rewarded.
The final value of compound interest refers to the sum of the principal plus interest, after receiving the interest within the agreed period, and then calculating the interest and rolling it to the agreed period. Simply put, it is to deposit a at the beginning, take I as the interest rate, and deposit the sum of principal and interest after n periods. Formula: f = a× (1+i) n. For example, if the principal is 50,000 yuan, the interest rate or return on investment is 3%, and the investment period is 30 years, the interest income obtained after 30 years is calculated according to the compound interest formula, and the sum of principal and interest (final value) is 50,000× (1+3%) 30.
Because the inflation rate and interest rate are closely related, just like the two sides of a coin, the formula for calculating the final compound interest value can also be used to calculate the actual value of a specific fund in different years. Just change the interest rate in the formula into the inflation rate.
Baidu encyclopedia-compound interest