Cd Apr Calculator

Step-by-Step Guide to Using the CD APR Calculator

Welcome to the CD APR Calculator. This guide will walk you through each step to effectively use the calculator and understand the results. Please follow the instructions carefully:

Input Fields

Begin by entering the required information in the input fields below:

• Principal Amount ($):
  Enter the amount you wish to deposit as a certificate of deposit (CD). This must be a number greater than or equal to 1. You can input values with up to two decimal places (e.g., 1000.50).
• Annual Interest Rate (%):
  Input the annual percentage rate (APR) offered by the CD. This rate can range from 0.01% to 100%. Enter the rate as a percentage, not a decimal, with up to two decimal places.
• Compounding Frequency:
  Select how often the interest is compounded. You have multiple options such as Annually, Semi-annually, Quarterly, Monthly, or Daily. Choose the option that corresponds to your CD offer.
• Term Length (Years):
  Indicate how long you plan to keep the money in the CD. You can select a term length ranging from 0.08333 years (approximately 1 month) to 30 years. Ensure the term length is entered in years, using increments of approximately one month (0.08333 years).

Result Fields

Once all inputs are provided, the calculator will compute and display the following results:

• Maturity Amount:
  This is the total amount you will have at the end of the CD term, which includes your initial principal and the accrued interest. It is calculated using the formula:
  principalAmount * pow((1 + (interestRate/100)/compoundingFrequency), (compoundingFrequency * termLength)).
  The amount will be formatted as USD with two decimal places.
• Total Interest Earned:
  This value represents the total interest earned over the CD term, calculated as:
  maturityAmount - principalAmount.
  The interest amount will be displayed in USD with two decimal places.
• Effective APR:
  This represents the actual annualized rate of return taking compounding into account. It is calculated as:
  (pow((1 + (interestRate/100)/compoundingFrequency), compoundingFrequency) - 1) * 100.
  The effective APR is shown as a percentage with two decimal places.
• Average Monthly Interest:
  This is the average amount of interest earned per month over the CD term. It is calculated using the formula:
  totalInterest / (termLength * 12).
  The monthly interest will be presented in USD with two decimal places.

By following these steps and understanding the calculations and results presented, you can effectively use the CD APR Calculator to evaluate your investment in a certificate of deposit.