Hello,
This is probably a rather simple question but I appreciate any feedback.
Assume you purchase a Certificate of Deposit from the bank under the following terms—,
Amount: $10,000 USD Term: 21 months Annual percent yield (apy): 0.75 interest compound method: 365/daily interest will be paid: monthly interest payment will be: added to balance
How can I calculate the balance be after 6 months? What will be the ending balance at maturity?
Hello,
My intuition is that you have to calculate the equivalent monthly compounded interest rate and then calculate individual monthly balances.
Let’s assume 30 days months.
(1 + i)^120.000 = 1.0075 so i = 0.00062
Month 1: Beg 10,000 Interest 6.23 End 10,00623
Month 2: Beg 10,006.23 Interest 6.23 End 10.012.46
Month 3: Beg 10.012.46 Interest 6.24 End 10,018.70
Month 4: Beg 10,018.70 Interest 6.24 End 10,024.94
Month 5: Beg 10,024.94 Interest 6.24 End 10,031.18
Month 6: Beg 10,031.18 Interest 6.25 End 10,037.43