1. What is the Compound Interest Formula?

The compound interest formula calculates the amount of interest earned on a fixed deposit where the interest is compounded periodically. For HDFC Bank FDs in Sri Lanka, interest is typically compounded monthly.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( P \) — Principal amount (initial investment in LKR)
• \( R \) — Monthly interest rate (annual rate divided by 12, as a decimal)
• \( N \) — Number of compounding periods (months)
• \( A \) — Final amount including interest (LKR)

Explanation: The formula accounts for interest being added to the principal each month, resulting in exponential growth of your investment.

3. Importance of FD Calculations

Details: Accurate FD calculations help you compare investment options, plan your finances, and understand how much your money can grow over time with compound interest.

4. Using the Calculator

Tips: Enter principal amount in LKR, annual interest rate in percentage, and investment period in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What are current HDFC Bank FD rates in Sri Lanka?
A: Rates vary by tenure and amount. Check HDFC Bank's official website or branch for current rates before investing.

Q2: How often is interest compounded in HDFC FDs?
A: For most HDFC FDs in Sri Lanka, interest is compounded monthly and credited quarterly.

Q3: Are there tax implications on FD interest?
A: Yes, interest income from FDs is typically subject to withholding tax in Sri Lanka. Consult a tax advisor for specifics.

Q4: Can I withdraw my FD before maturity?
A: Premature withdrawals are usually allowed but may incur penalties and reduced interest rates.

Q5: How does this compare to simple interest?
A: Compound interest earns more than simple interest because you earn "interest on interest" over time.