Estimated Earnings
Enter details above to see your estimated earnings.
Understanding CD Rates and APY
A Certificate of Deposit (CD) is a savings product offered by banks that typically offers a higher interest rate than a regular savings account in exchange for you agreeing to leave your money untouched for a fixed period. Eastern Bank offers various CD terms and rates to help your savings grow.
Key Terms:
- Initial Deposit Amount: This is the principal amount you initially invest in the CD.
- Annual Percentage Yield (APY): APY represents the total amount of interest you will earn on a deposit account over one year, including the effect of compounding. It's a standardized way to compare returns across different financial institutions. A higher APY means you'll earn more interest.
- CD Term: This is the length of time your money is locked in the CD. Longer terms often come with higher APYs, but also reduce your access to funds.
How the Calculator Works:
This calculator uses the APY to estimate your earnings. The formula for calculating the future value of an investment with compound interest is:
Future Value = P * (1 + r/n)^(nt)
Where:
- P = Principal Amount (Initial Deposit)
- r = Annual interest rate (as a decimal)
- n = Number of times that interest is compounded per year. For APY, we assume n is 1 for simplicity in this calculation as APY already factors in compounding.
- t = Time the money is invested for, in years.
To simplify for this calculator, we use the APY directly. The APY accounts for the compounding frequency. The calculation performed is:
Total Earnings = P * ((1 + APY/100)^(t)) - P
Where 't' is the term in years (term in months / 12).
function calculateCDInterest() {
var principalAmount = parseFloat(document.getElementById("principalAmount").value);
var annualPercentageYield = parseFloat(document.getElementById("annualPercentageYield").value);
var termInMonths = parseFloat(document.getElementById("termInMonths").value);
var earningResultElement = document.getElementById("earningResult");
var totalValueResultElement = document.getElementById("totalValueResult");
earningResultElement.innerHTML = "";
totalValueResultElement.innerHTML = "";
if (isNaN(principalAmount) || isNaN(annualPercentageYield) || isNaN(termInMonths) || principalAmount <= 0 || annualPercentageYield < 0 || termInMonths <= 0) {
earningResultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var rateDecimal = annualPercentageYield / 100;
var termInYears = termInMonths / 12;
// Calculate future value using APY
// Since APY already accounts for compounding, we can use a simplified formula for total growth over the term
// Future Value = P * (1 + APY)^t
var futureValue = principalAmount * Math.pow((1 + rateDecimal), termInYears);
var totalInterestEarned = futureValue – principalAmount;
earningResultElement.innerHTML = "Estimated Interest Earned:
$" + totalInterestEarned.toFixed(2) + "";
totalValueResultElement.innerHTML = "Estimated Total Value at Maturity:
$" + futureValue.toFixed(2) + "";
}
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