Here is a simple explanation on how to compute your interest in the bank: ( for time deposit )
The Formula:
cash x ( days / 360 ) x interest rate x withholding tax = interest
Example:
If you have 50,000php and you deposited it for 30 days. The interest rate is 3.125% p.a.
50,000 x 30 / 360 x 0.03125 x 0.8 = 104.17
1. divide the number of days by 360, because the interest rate of banks are per annum ( per year ).
30 / 360 = 0.83333333333
2. multiply the result by bank interest. Then multiply it again by the cash deposited.
0.83333333333 x 0.03125 (interest) x 50000 ( cash ) = 130.208
3. multiply the result by 0.80, because the withholding tax is 20%. Then the result is your final interest.
130.208 x 0.80 ( tax is 20% of interest ) = 104.17
Your interest for a month is:
104.17php
