This is the bank fixed deposit's start date and end date with the principal and maturity amounts. The rate is 7% p.a.
Could anyone help with how the bank has calculated this maturity amount?
This is the bank fixed deposit's start date and end date with the principal and maturity amounts. The rate is 7% p.a.
Could anyone help with how the bank has calculated this maturity amount?
You get pretty close if you use 30-day months and monthly compounding. In your case, the monthly rate would be 7%/12 or 0.5833%, and there are 19 full months between those dates. So the balance after 19 full months would be:
42,01,593 * (1+0.0058333)^(19) = 46,92,543
For the remaining 21 days (from 17-6-2024 to 8-7-2024), the daily interest rate would be
46,92,543 * 0.0058333 / 30 = 912.44
So the remaining interest for those 21 days would be
912.44 * 21 = 19,161
And the total final balance would be
46,92,544 + 19,161 = 47,11,706
There are probably some differences in when each compounding period starts (e.g. the periods may start on the first of each month and you get a partial month's interest at the beginning) or differences in daycount, but that's the general idea - compound the balance using some periodic rate and then add in the daily remainder.
Your bank statement or initiation documents probably outline the exact day count convention and interest calculation method.
Assuming monthly compounding (which is what most banks use, at least in the US), this should be twelvth root of 1.07 to get the monthly interest multiplier, raised to the power of -- is that 19 compounding dates? -- to get the multiplier over the entire time period, multiplied by the starting amount to produce the final amount. Standard compound interest formulas.
Working that through:
Not exactly the same number, but close.
If they're doing daily compounding the math is similar but the result would be a bit higher. Trying it that way, I get:
Closer but still not exact; I suspect that the remaining disagreement really is round-off differences between their computation and mine. Since the difference is in your favor, I wouldn't suggest complaining. :-)
For a more exact answer, ask the bank when they're compounding and how many digits they're keeping in the calculations.