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Time period (T)
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Time period (T) is the length of time that the money is borrowed or lend.
Decimal numbers can be entered.
Normally the interest (I) is calculated at the end of each time period (T).
There are two ways to specify the time period:
- Method 1:
Enter a value and select the unit time period: days, weeks, bi-weeklies, semi-monthlies, months, bi-monthlies, quarters, semi-annuallies or years.
- Method 2:
Select a from date and to date.
The number of days between the from and to date is the time period.
Method 1: You can choose between the following unit time periods:
- days
For example: 5 days
The interest (I) is calculated at the end of 5 days.
- weeks
For example: 5 weeks
The interest (I) is calculated at the end of 5 weeks.
- bi-weeklies (every two weeks)
For example: 5 bi-weeklies
The interest (I) is calculated at the end of 5 bi-weeklies.
- semi-monthlies (twice a month)
For example: 5 semi-monthlies
The interest (I) is calculated at the end of 5 semi-monthlies.
- months
For example: 5 months
The interest (I) is calculated at the end of 5 months.
- bi-monthlies (every two months)
For example: 5 bi-monthlies
The interest (I) is calculated at the end of 5 bi-monthlies.
- quarters
For example: 5 quarters
The interest (I) is calculated at the end of 5 quarters.
- semi-annuallies (twice a year)
For example: 5 semi-annuallies
The interest (I) is calculated at the end of 5 semi-annuallies.
- years
For example: 5 years
The interest (I) is calculated at the end of 5 years.
Using bi or semi in front of time periods means:
- bi = every two
For example:
bi-weekly = every two weeks
bi-monthly = every two months
- semi = twice a
For example:
semi-annually = twice a year
semi-monthly = twice a month
The interest rate (R) and time period (T) should be in the same time units such as weeks, months, years etc.
If they differ the calculator will adjust the time period accordingly.
Example 1: How time period will be adjusted:
Interest rate = 5% per month
Time period = 7 weeks
52 weeks equals 12 months equals 1 year
Thus 7 weeks equals (7*12)/52 = 1.615384 months
Example 2: How time period will be adjusted:
Interest rate = 5% per two weeks
Time period = 2 quarters
4 quarters equals 26 two weeks equals 1 year
Thus 2 quarters equals (2*26)/4 = 13 two weeks
Example 3: How time period will be adjusted:
Interest rate = 5% per half year
Time period = 2 half months
24 half months equals 2 half years equals 1 year
Thus 2 half months equals (2*2)/24 = 0.166667 half year
The simple interest equation:
FV = P + I
I = P * R * T
where:
FV = Future value
I = Interest amount
P = Principal amount
R = Interest rate (as a decimal, not in percentage)
T = Time period
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