SN = A( 1+R)+A( 1+2R)+…+A( 1+NR)

=NA+ 1/2 N(N+ 1)AR

Among them, A represents the principal deposited in each period, SN is the sum of principal and interest after N periods, and SN can also be called the final value of simple interest annuity. In the above formula, NA is the total amount of principal saved, and1/2n (n101) ar is the total amount of interest earned.

If someone has a sum of cash 1000 yuan, deposit it in the bank for one year, and then withdraw the sum of principal and interest and deposit it in the bank for one year. After maturity, he will withdraw the principal and interest and deposit them all in the bank (for one year). The sum of principal and interest after three years is as follows.

First year: principal and interest =1000 * (1+2.25%) =1022.50 (yuan)

Second year: principal and interest =1022.50 * (1+2.25%) =1045.50 (yuan).

Third year: principal and interest =1045.50 * (1+2.25%) =1069.03 yuan.

Extended data

The interest rate policy affects the exchange rate by affecting the current account. When interest rates rise, credit is tight, loans are reduced, investment and consumption are reduced, and prices are lowered. To a certain extent, imports are suppressed, exports are promoted, foreign exchange demand is reduced, foreign exchange supply is increased, and foreign exchange rate is reduced and local currency exchange rate is increased.

Contrary to the rise in interest rates, when interest rates fall, credit expansion and money supply (M2) increase, which stimulates investment and consumption and pushes up prices, which is not conducive to exports and is beneficial to imports.

The impact of exchange rate changes on interest rates is also indirect, that is, it indirectly affects interest rates by affecting domestic price levels and short-term capital flows.