Administration Manual - B.E.S.T. Undertaking.

1169
It is a type of investment can be made with Banks as like STD/TD. In case of
Certificate of Deposit, Investor has to place discounted value with the Bank and on
maturity gets maturity value with interest. We have to decide the amount to be
received on maturity so that we can work out discounted value to be placed with
Banks. Formula for calculation is as under :-
A
3650000
----------------------------------------- x Principal Amount __ 100
3650000 + (Rate of Interest x No.of days)
B C D E
Steps of Calculation :-
1. First workout C i.e. Rate of interest x No.of days
2. Then A
-------------- = Product.
B +C
3. Multiply Principal amount i.e. D and Product
4. Divide it by 100 i.e. E
5. Finally, we arrive at discounted value
Example :-
If we want maturity value of Rs.7,25,00,000/- Certificate of Deposit for 110
days @ 10.60% Then discounted value is to be worked out as under :-
1. Rate of Interest X No.of Days i.e. 10.60% x 110 = 1166
36500 + 1166 = 37666
2. To work out product i.e. 3650000
--------------- = 96.9043699888
37666
3. Multiply product and amount to be received on maturity i.e.
96.9043699888 x 7,25,00,000 = 7025566824.18
4. Divide the answer of step 3 by 100 i.e.
7025566824.18 -:- 100 = 70255668.24
5. Rs.70255668 is the discounted value to be placed with Bank to get maturity
value of Rs.7,25,00,000/- for Certificate of Deposit of 110 days @ 10.60%
NOTE :