5 financial calculations that are becoming easy with technology

Financial calculators are tools that are designed to operate and evaluate absolute input equations that a regular calculator cannot handle. It is devised with stand-alone keys that are unavailable on other kinds of calculators. This qualifies it to carry out more direct calculations. The evaluations are for functions such as simple interest, compound interest, recurring deposit returns, and more.

A financial calculator such as an RD calculator can evaluate some basic statistics like linear regressions, correlations, weighted averages, and so on. This eradicates the necessity to go stepwise to execute these calculations. RD calculators and other financial calculators spontaneously perform the calculations on entering the data. Technology has simplified this by making this application easily accessible online. All one needs to do is type out what kind of financial calculator he/she is looking for, and the search results immediately reflect the relevant pages of various financial institutions and blogs, to carry out these calculations. Hence, in a nutshell, it is safe to say technology is the holy grail that has made such financial calculations more convenient and accessible for everyone to strategize their financial planning well and in advance.

Plan smarter using a financial calculator over a standard calculating device. Image Source: canva.com

For instance, if an investor deposits INR 1.5 lakh in a recurring deposit(RD) account that earns 5 percent interest, the RD calculator will help calculate the maturity amount of this investment for a specific tenure period. To understand the functionalities of the RD calculator and other financial calculators, further simplified by technology, given below is a comprehensive guide of 5 such financial calculators. An accountant or a businessman or a student or anyone who wants to resolve any problems geared towards finance specific questions, these technology-friendly calculators have got you covered.

  1. Simple Interest Calculator 

The simple interest calculator evaluates the amount of money to be accrued after a fixed tenure on the principal amount and a fixed rate of interest. The interest rate gets added to the principal amount invested, thus allowing the initial investment to grow.

The simple interest calculator estimates the amount to be accrued with the simple equation:

A = P(1 + rt)

Here,

A = The Total Amount ensued (principal + interest)

P = The Principal Amount

I = The Interest Amount

r = The Interest Rate per annum (in decimal); r = R/100

R = The Interest Rate per annum (in percent); R = r * 100

t = The Tenure Period in months or years

Note: Ensure the values of r and t are at the same time units such as months or years.

2. Compound Interest Calculator

A compound interest calculator helps chart the growth of an individual’s investments and determine how much compound interest can be earned on savings and letting the invested money grow over time. With the help of technology, this online tool easily computes the interest added to the principal sum deposited. Given below is the formula used to the accrued amount from the result of reinvesting interest on the principal sum inclusive of the previously multiplied interest:

A = P{1 + \frac(r)(n)}^(nt)

Here,

A = The Total Amount ensued

P =The Principal Amount

r = The Interest Rate

n = The number of times Interest gets applied for the given Tenure Period

t = The Tenure Period in months or years

Note: Ensure the values of r and t are at the same time units such as months or years

3. Credit Card Payment Calculator

Using this calculator helps figure out effective strategies to pay credit card debts. All that one needs to input in this calculator are the credit card balance owed, credit card interest rate, expected monthly payment, or the desired timeframe for payoffs. With the help of technology, this dynamic calculator provides the required estimated numbers, thus giving a clearer holistic picture. The calculator page for most financial institutions and blogs come with a progressive graphical breakdown and report to further understand the payoff details.

4. Personal Loan Calculator

The personal loan EMI calculator available online helps determine the monthly payments or equated monthly installments (EMI) on the availed loan. This calculator exhibits the EMI amount to be paid, along with a detailed repayment table including the breakup of the total amount to be paid off- Loan Amount + Interest Amount + Processing Fee) for the tenure period. The loan calculator requires the simulated inputs on the loan amount, the interest rate, and the loan period.

A good personal loan calculator page also includes a graphical representation of the breakdown as to how much of the principal amount and interest will be paid off during each EMI. It also includes an amortization table, giving a breakdown of monthly payments of principal and interest amounts paid, the total payment made, and the outstanding loan balance.

The calculator approximates the EMI data based on the simple equation below:

E = {P x R x (1+R) ^ N} / {(1+R) ^ N – 1}

Here,

E = The EMI to be paid

P = The Loan Amount Borrowed

R = The Monthly Interest Rate

N = The Loan Tenure in Months

5. Recurring Deposit (RD) Calculator free online recurring deposit calculator

The RD calculator calculates the maturity value of a recurring deposit amount. Before looking into how an RD calculator computes the value, the investor must look at each month’s installment taken as a separate deposit. Also, to remember, the compounding happens at the end of a fiscal quarter and not monthly. Each of the monthly deposits will have a different interest amount. So, the amount accumulated on maturity is the total of the enhanced value from each of the monthly deposits. An RD calculator requires inputs on three fields to estimate one’s potential earnings on investing in a recurring deposit. These include the amount deposited every month, the interest that the lending institution will be providing, and the tenure period during which these deposits are to be made.

Most banks and lending institutions provide a free online recurring deposit calculator, and this RD calculator compounds a quarterly maturity value on receiving the inputs on the following formula:

(Maturity value of RD; based on quarterly compounding)

M =R [(1+r) N – 1] / 1 – (1+r) (-1/3)

Here,

M = The Maturity Value of the RD

R = RD Installment to be paid Monthly

N = Number of Quarters (tenure)

r = Rate of Interest / 400

Note: The amount evaluated by the RD calculator online is only apposite when the interest amount is compounded quarterly

Use an RD calculator to plan an astute RD investment for more returns and further investment in other sectors!

Image Source: canva.com

The technological applications of online financial calculators such as the RD calculator are of massive help for a tactful, well-planned approach to any monetary situation. Knowledge is power- this holds true for financial planning. Knowing the actual cost of any significant investments, and the amount of money that one is capable of investing can make a substantial difference between balancing a stable budget and ruling out the burden of stressful debt. Preparing for any unanticipated anomalies, and having clarity on the financial stability helps plan a comfortable lifestyle. So as the conclusive bottom line is: from helping out in professional endeavors to narrowing down on personal financial aspirations, a financial calculator is undisputedly the saving grace- seamlessly versatile for various requirements, unlike a standard calculator.

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