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Annuity Deposit Scheme Formula:
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The Annuity Deposit Scheme Monthly Income calculation determines the fixed monthly payment amount from an investment based on present value, interest rate, and payment period. It's commonly used for retirement planning and fixed income investments.
The calculator uses the annuity formula:
Where:
Explanation: This formula calculates the fixed monthly payment that can be withdrawn from an investment while accounting for both principal and interest earnings over the specified period.
Details: Accurate monthly income calculation is crucial for retirement planning, investment strategy, and ensuring sustainable withdrawal rates from savings and investments.
Tips: Enter present value in currency, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and number of months. All values must be valid (PV > 0, rate > 0, months ≥ 1).
Q1: What is the difference between annual and monthly rate?
A: The monthly rate is the annual rate divided by 12. Make sure to convert annual rates to monthly before calculation.
Q2: Can this calculator be used for loan payments?
A: Yes, the same formula is used for calculating fixed monthly loan payments, where PV represents the loan amount.
Q3: What happens if the interest rate is zero?
A: With zero interest, the monthly income would simply be the present value divided by the number of months.
Q4: How does the payment period affect monthly income?
A: Longer payment periods result in smaller monthly payments, while shorter periods yield larger monthly amounts.
Q5: Is this calculation suitable for variable rate investments?
A: No, this formula assumes a fixed interest rate throughout the payment period. Variable rates require more complex calculations.