Sunday, 30 January 2011

Maturity amount calculation for recurring deposit in MS Excel

Maturity amount calculation for recurring deposit where interest is compounded quarterly, using the function FV:

Maturity amount = FV( (Rate of interest)/4, 4 * (Period in years), - (Value of each instlament) * (3 + (Rate of interest) / 2))

For example, an RD of Rs. 5000 each month for a period of 1.5 years at interest 7.5% p.a. compounded quarterly yields on maturity and amount of:

FV(7.5%/4, 4 * 1.5, -5000 * (3 + (7.5%/2))) = Rs. 95,504.78

The above formula is a general formula and individual banks might use a slightly different formula.  For example, the Indian Banks' Association uses the following formula for computing the maturity value where interest is compounded quarterly (Source: http://www.iba.org.in/formula.asp):


Maturity amount = ((Value of each instlament) * ((1+i)^n-1))/(1-(1+i)^(-1/3)),

where i = (Rate of interest) /4

    and n = number of quarters.

Hence, taking the same example of RD of Rs. 5000 each month for a period of 1.5 years at interest 7.5% p.a. compounded quarterly, the maturity value, according to this formula is:


((5000) * ((1+(7.5%/4))^6-1))/(1-(1+(7.5%/4))^(-1/3)) = Rs. 95502.35

Extending the formula to other compounding periods:


For Monthly compounding: 

Maturity amount = ((Value of each instlament) * ((1+i)^n-1))/(1-(1+i)^(-1))

where i = (Rate of interest)/12

   and n = number of months.


For half-yearly compounding: 
Maturity amount = ((Value of each instlament) * ((1+i)^n-1))/(1-(1+i)^(-1/6))

where i = (Rate of interest)/2

   and n = number of years * 2.


Download the following app on your android phone to compute the maturity amount for fixed and recurring deposits: http://goo.gl/olkbN.

Saturday, 29 January 2011

Maturity amount calculation for fixed deposit

Maturity amount calculation for fixed deposit where interest is compounded quarterly:

Maturity amount = Principal * ( 1 + (Rate of interest)/4 ) ^ (Period * 4)

For example, deposit of Rs. 1,00,000 deposited for a 5 year period, at 9% per annum interest compounded quarterly, yields on maturity an amount of:

Rs. 1,00,000 * (1 + 0.09/ 4) ^ (5 * 4) = Rs. 1,56,050.92

Saturday, 22 January 2011

An imaginary idea to eliminate corruption in politics

Someone should start a political party with the agenda that activities of all the leaders of the party will be recorded at all times. The recorded videos should be telecast deferred live. The activities of all people associated with the party must be similarly recorded. The agenda of the party should be to bring this to also the administration of the country.

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