How do i work out what percentage interest has been paid knowing the amount invested and the interest paid?
Answer:
Just divide the interest paid over the amount invested and times the answer with 100 to get the interest percentage
Go back to school and learn - you will find it more satisfying.
Assuming the period is a year.
interest paid gross/investment*100
Calculator will work it out
you take the amount invested and divide it into the amount received that will give you the % . to get the annul % you need to divide the number of days in to the % then multiply 365 for the number of days in a year
I assume you have just invested one lump sum, as opposed to making regular payments (e.g. monthly).
I will show you how to calculate the annual interest rate you have earned.
The annual rate is a good indicator as this is what is quoted by banks for their savings accounts.
Suppose you invest a lump sum of £5,558 for 5 months and are paid £12.23 interest in total for that 5 months.
Let i = annual interest rate
You have invested for a period of 5/12 of a year ( 5 months out of 12).
This means that your:
initial investment * ( 1 + annual interest rate ) ^ (5/12)
= Initial investment plus interest earned
the ^ sign stands for "power" and is on most scientific calculators.
So in our example:
5558 * (1 + i) ^ (5/12) = 5558 +12.23
5558 * (1+ i ) ^ (5/12) = 5570.23
Then with a little rearrangement we see that:
i = (5570.23 / 5558) ^ ( 12 / 5) - 1
i = 0.00523
if we multiply that by 100
0.00523 *100 = 0.523% we get the answer.
So basically:
i = ((Investment + Interest) / investment ) ^ (12 / months held) - 1
Then multiply by 100 to see it as a percentage.
Hope that wasn't too complicated!
Make sure you use the brackets in your calculation!
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