Certificate of Deposit Solution

STEP 0: Pre-Calculation Summary
Formula Used
Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)
CD = P0Deposit*(1+(rAnnual/nc))^(nc*nt)
This formula uses 5 Variables
Variables Used
Certificate of Deposit - Certificate of Deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements.
Initial Deposit Amount - Initial Deposit Amount is the amount of money required to open a savings or investment account is called Initial Deposit Amount.
Annual Nominal Interest Rate - Annual Nominal Interest Rate (in decimals) is the periodic interest rate multiplied by the number of periods per year.
Compounding Periods - Compounding Periods is the number of times compounding will occur during a period.
Number of Years - The Number of Years is the total period for which the certificate of deposit is done.
STEP 1: Convert Input(s) to Base Unit
Initial Deposit Amount: 5000 --> No Conversion Required
Annual Nominal Interest Rate: 0.015 --> No Conversion Required
Compounding Periods: 10 --> No Conversion Required
Number of Years: 5 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
CD = P0Deposit*(1+(rAnnual/nc))^(nc*nt) --> 5000*(1+(0.015/10))^(10*5)
Evaluating ... ...
CD = 5389.11791082906
STEP 3: Convert Result to Output's Unit
5389.11791082906 --> No Conversion Required
FINAL ANSWER
5389.11791082906 5389.118 <-- Certificate of Deposit
(Calculation completed in 00.004 seconds)

Credits

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Bhilai Institute of Technology (BIT), Raipur
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Important Formulas of Investment Calculators

Compound Interest
​ Go Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested)
Certificate of Deposit
​ Go Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)
Capital Gains Yield
​ Go Capital Gains Yield = (Current Stock Price-Initial Stock Price)/Initial Stock Price
Risk Premium
​ Go Risk Premium = Return on Investment (ROI)-Risk Free Return

Certificate of Deposit Formula

Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)
CD = P0Deposit*(1+(rAnnual/nc))^(nc*nt)

What is Certificate of Deposit?

A certificate of deposit (CD) is a product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time. Regulated by the Reserve Bank of India, it is a type of money market instrument issued against the funds deposited by an investor with a bank in a dematerialized form for a specific period of time. Issued by the Federal Deposit Insurance Corporation (FDIC) and regulated by the Reserve Bank of India, the CD is a promissory note, the interest on which is paid by the bank.

Advantages of Certificate of Deposit

1. Since these are government-backed securities, the investor’s principal amount is kept safe. Hence, it can be said that CDs are a less risky investment option than stocks or bonds. 2. Certificate of Deposit is known to offer a higher rate of interest and better returns in comparison to the traditional savings accounts. 3. Investments in CD grant a grace period of 7 days to the investor to decide whether or not he/she wants to reinvest the matured amount.

How to Calculate Certificate of Deposit?

Certificate of Deposit calculator uses Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years) to calculate the Certificate of Deposit, Certificate of Deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements. Certificate of Deposit is denoted by CD symbol.

How to calculate Certificate of Deposit using this online calculator? To use this online calculator for Certificate of Deposit, enter Initial Deposit Amount (P0Deposit), Annual Nominal Interest Rate (rAnnual), Compounding Periods (nc) & Number of Years (nt) and hit the calculate button. Here is how the Certificate of Deposit calculation can be explained with given input values -> 5389.118 = 5000*(1+(0.015/10))^(10*5).

FAQ

What is Certificate of Deposit?
Certificate of Deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements and is represented as CD = P0Deposit*(1+(rAnnual/nc))^(nc*nt) or Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years). Initial Deposit Amount is the amount of money required to open a savings or investment account is called Initial Deposit Amount, Annual Nominal Interest Rate (in decimals) is the periodic interest rate multiplied by the number of periods per year, Compounding Periods is the number of times compounding will occur during a period & The Number of Years is the total period for which the certificate of deposit is done.
How to calculate Certificate of Deposit?
Certificate of Deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements is calculated using Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years). To calculate Certificate of Deposit, you need Initial Deposit Amount (P0Deposit), Annual Nominal Interest Rate (rAnnual), Compounding Periods (nc) & Number of Years (nt). With our tool, you need to enter the respective value for Initial Deposit Amount, Annual Nominal Interest Rate, Compounding Periods & Number of Years and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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