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// Compound interest | |
// Compound interest increases as a certain percentage | |
// of the principal each year. This gives us the formula | |
const compoundInterest = ({principal, ratePercentage, time}) => { | |
return principal * ((1 + ratePercentage/100) ** time); | |
}; | |
const initialAmount =({finalAmount,ratePercentage, time })=> { | |
return finalAmount/((1 + ratePercentage/100) ** time); | |
} | |
compoundInterest({principal: 1, ratePercentage: 10, time: 7}); | |
// initial buying power in a year | |
let principal = 1200000; | |
let fdInterestRate = 5; | |
let inflationRate = 7.8; | |
// the target buying power you want as interest from your savings. This is your income at the end of 10 years | |
let targetInterest = compoundInterest({principal: principal, ratePercentage: inflationRate, time: 10}) | |
// the above income should come as interest from this final accured amount | |
let finalAccuredAmount = targetInterest * 100.0 / fdInterestRate; | |
// to get this final accured amount you need to have atleast this amount in bank at the moment. | |
initialAmount({finalAmount: finalAccuredAmount, ratePercentage: fdInterestRate, time: 10}) |
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