How much would you earn on $10k, $50k and $100k in 8 months?

$33.33/$1000 invested.

0.05 x $1000 = $50/year
8 months /12 months = 0.66
$50*.66=$33.33

quote:

Originally posted by barndg00:

$33.33/$1000 invested.

That would be for simple interest on the original principal.

If it's compound interest, the return would be a bit more than that, depending on how the compounding is done.

My bank figures it out for it's customers.
And
They let you know the parameters of the agreement

Depends on how often the interest is compounded and if your 5% is APR or APY but basically it would be 2/3 of the annual interest earned. So for $10k the annual interest earned would be about $500 and for 8 months it would be about $333.

The are calculators available for this (and so many other things!) on the internet. You could simply search 'APY Calculator' and boom...

Here's one --> https://www.thecalculatorsite....s/apy-calculator.php

I just get close - if you're getting 5% on a $1000 that's $50 a year. Divide by 12 and you're close enough for horseshoes and hand grenades.

(1+.05/12)^8*(the amount invested) - (the amount invested) will give you the amount of interest earned assuming monthly compounding.

APY is a percentage, Annual Percentage Yield (it’s in the name even), so answering the thread title’s question, APY = (((1+.05/12)^12)-1)*100 or 5.12% assuming monthly compounding.

How often does the interest compound?

There are calculators for this all over the innerwebs. Excel has formulae, too.

I dont know enough to know if this will be helpful but I put some cash in a high yield savings. I'm getting 5.06% and I don't have to lock in the cash like a CD. Just a thought.

Typically banks compound interest once a month.

I’m sure there’s an easier way but..

(10,000 x .05)/12= $41.67 interest the first month.

Add that to the principal and repeat the calculation.

(10,041.67 x .05)/12= $41.84. Second month interest. Add that to the $10,041.67 and repeat for 8 months.

quote:

Originally posted by ruger357:
Typically banks compound interest once a month.

I’m sure there’s an easier way but..

(10,000 x .05)/12= $41.67 interest the first month.

Add that to the principal and repeat the calculation.

(10,041.67 x .05)/12= $41.84. Second month interest. Add that to the $10,041.67 and repeat for 8 months.

Do you have an HP financial calculator?

quote:

Originally posted by old rugged cross:
How much would you earn on $10k, $50k and $100k in 8 months?

Depends on your tax bracket, unless it's in an IRA or other tax protected account.

quote:

Originally posted by ruger357:
Typically banks compound interest once a month.

I’m sure there’s an easier way but..

(10,000 x .05)/12= $41.67 interest the first month.

Add that to the principal and repeat the calculation.

(10,041.67 x .05)/12= $41.84. Second month interest. Add that to the $10,041.67 and repeat for 8 months.

Three posts above yours.

(1+.05/12)^8*10000-10000=$338.24

No HP 19BII needed. Mine cost 1/3 of a semester’s tuition at the time. Ease of use made it well worth it. Compared to students using lesser HP calculators, I would have the answer when the professor finished writing the problem on the board while everyone else would still be trying to figure out how to put the numbers into their calculators. I even programmed the Black-Sholes method of options pricing into it. We were allowed to write it on notecards for the exam, so I asked the professor if he had a problem with me programming it into my calculator. He didn’t. You should have seen the looks when I finished the final in 1/3 the time. A’ced it.

I got a lot of practice with APR and APY during my first job out of school. While auditing S&Ls and Credit Unions being a first year, I got the mundane task of checking that the interest and principle were being calculated correctly on various loans and CDs.

quote:

Originally posted by trapper189:

(1+.05/12)^8*(the amount invested) - (the amount invested) will give you the amount of interest earned assuming monthly compounding.

APY is a percentage, Annual Percentage Yield (it’s in the name even), so answering the thread title’s question, APY = (((1+.05/12)^12)-1)*100 or 5.12% assuming monthly compounding.

This is the correct answer (I'm a math major). Might have to be adjusted if the compounding schedule is other than monthly, but the framework is absolutely correct.

My Excel program solves these problems easily. I also have an HP financial calculator that I have had for about 40 years that will solve those problems as well.

Put money to work.

Gage your liquidity needs first.

Most people create CD ladders with varying duration to balance risk and reward.

I thought it's a law that you also get the APR number with any commercial transaction involving interest rate. You would divide the APR by 12 and multiply the compounding amount by the APR/12 for each month.