# How is recurring deposit calculated?

## How is recurring deposit calculated?

The formula used is A = P(1+r/n) ^ nt, where ‘A’ represents final amount procured, ‘P’ represents principal, ‘r’ represents annual interest rate, ‘n’ represents the number of times that interest has been compounded, ‘t’ represents the tenure.

### How do you calculate RD manually?

How to calculate RD amount in a recurring deposit account?

1. Interest = P * (12 + 11 + 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1) / 12 * r / 100.
2. Interest = P * (12 + 11 + 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1) * 1 / 12 * r / 100.
3. Interest = P * 12 * (12 + 1) / 2 * 1 / 12 * r / 100.

How RD maturity is calculated?

This is the standard formula used in the calculation of the RD maturity amount, regardless of the sum invested or tenure….The formula to determine RD maturity.

A Maturity Amount
N Compounding Frequency (no. of quarters)
R RD interest rate in percentage
t Tenure

What is recurring deposit with example?

Features of Recurring Deposit

RD Features Applicability
Rate of interest Between 5% to 8% (variable from one bank to another)
Amount of minimum deposit From Rs. 10
Tenure of investment Between 6 months and 10 years
Frequency of interest calculation Usually every quarter

## How do you calculate RD in Excel?

So, we shall calculate the effective rate for Quarterly compounding: =EFFECT(8.75%,4) = 041%…Method 1: Using Excel’s FV Function.

Interest Compounded Calculated After (Days or Months) No. of Payments/Year
Monthly 1 12
Bi-monthly 2 6
Quarterly 3 4
Semi-annually 6 2

### Can I open RD for 3 months?

RD accounts come with a lock-in period of 30 days-3 months subject to the bank’s discretion. Withdrawal within the lock-in period will not fetch any interest. A single account holder can open any number of RD accounts. Advance deposits are allowed by a few banks and by the Post Office.

How do I set up a recurring deposit?

Only Once

• Daily
• Weekly
• Every other week
• Twice a month
• Every four weeks
• Monthly
• Every other month
• Every three months
• Every four months
• How to set up recurring deposits?

– Click the Gear icon. – Under Lists, choose Recurring Transactions. – Click New. – From the Transaction Type drop-down, choose Invoice. – Click OK. – Set up and enter all the necessary information. – Select Save Template.

## How do we derive the formula for Recurring Deposit interest?

A = final amount

• P = principal amount (initial investment)
• r = annual nominal interest rate (as a decimal,not in percentage)
• n = number of times the interest is compounded per year
• t = number of years
• ### What are the benefits of using recurring deposit?

One year RD can be opened to make annual insurance payments.

• One can plan for longer period say up to 5 years so that bigger expenditures like purchase of fixed assets like land,automobiles can be considered.
• One can anticipate festival and marriage season purchases and make systematic investment in RD account in easy installments.