Periodic Interest Rate Math

Periodic compound interest calculator this periodic compound interest calculator estimates either the accrued amount principal interest earned principal invested rate of return or term no.

Periodic interest rate math. Note that rate r r and time t should be in the same time units such as months quarters or years. The periodic rate is written as i2 and it is simply half of j2 i2 j2 2 4. 1 000 invested at 10 for 5 years. I want to calculate.

For example you want to know the daily periodic rate for a credit card that has 18 annual interest. Present value pv 1 000. Number of periods n 5. There is in more information on this topic below the application.

Interest rate is 10 which as a decimal r 0 10. If you can manage modest monthly periodic deposits of 80 basically the cost of cell phone service your savings will be measurably more. Of periods by using the compound interest formula ac p 1 r t. Interest rate r is the nominal interest rate or stated rate in percent.

I interest amount. N number of payments per year i e 12 for monthly payment 1 for yearly payment and so on. Enter 18 and 365. An investment s periodic rate is 1 if it has an effective annual return of 12 and it compounds every month.

For example an annual interest rate of 6 compounded monthly would be an interest rate of 005 per month 06 12. What if we have a nominal interest rate with quarterly compounding j4 8. Let s look at another example. Pr ar n.

R 1 i m m n 1. So while the nominal interest rate is always the rate per year the periodic rate is the rate per compounding period. R rate of interest per period in percent. If you invested 5 000 with an interest rate of 4 percent annually you would have 6 083 26 after five years and 13 329 18 after 25 years.

The periodic interest rate r is calculated using the following formula. So we have 2 compounding periods here and each period we add 4 to the loan. The period interest rate per payment is integral to the calculation of annuity instruments including loans and investments. M number of compounding periods per year.

P principal amount. Where i nominal annual rate. T number of periods. The equation for determining the periodic rate is.

That is a solid gain over time but you can do better. P r m where r is the annual rate. Pr periodic interest rate ar annual interest rate n number of times per year interest is compounded. R rate of interest per period as a decimal.