Calculator Methodology & Mathematical Logic

Last Updated: June 23, 2026

WealthMaze believes in complete mathematical transparency. We do not use black-box code structures or arbitrary values. This page details the standard financial and algebraic formulas, compounding schedules, and parameters that govern our calculator engines.

1. Systematic Investment Plan (SIP) & Compounding

Our SIP Calculator uses the Future Value (FV) of an annuity due formula. Since contributions are made at the beginning of each monthly interval, the formula is:

FV = P × [ ((1 + i)ⁿ- 1) / i ] × (1 + i)

Where:
- FV = Future Value (total maturity value)
- P = Monthly contribution amount
- i = Monthly interest rate (expected annual rate / 12 / 100)
- n= Total number of monthly installments (time period in years × 12)

For Lumpsum / Compound Interest calculations, we use standard compound growth:

A = P × (1 + r/n)^{n × t}

Where:
- A = Maturity Amount
- P = Principal investment amount
- r = Annual nominal interest rate (decimal form)
- n = Compounding frequency per year (e.g., 12 for monthly, 4 for quarterly)
- t = Tenure in years

2. Loan EMI & Amortization

Equated Monthly Installments (EMI) are calculated strictly under the reducing-balance method. The formula is:

EMI = P × r × [ (1 + r)ⁿ / ((1 + r)ⁿ - 1) ]

Where:
- P = Outstanding loan principal amount
- r = Monthly interest rate (annual interest rate / 12 / 100)
- n= Loan tenure in months (years × 12)

Amortization Timeline Calculation: For each monthly payment interval:

Interest Portion = Outstanding Principal × Monthly Interest Rate
Principal Portion = EMI - Interest Portion
Ending Principal = Beginning Principal - Principal Portion

3. Compound Annual Growth Rate (CAGR)

To evaluate annualized performance of mutual funds, stocks, or real estate assets, the CAGR formula is:

CAGR = (End Value / Start Value)^{(1 / t)} - 1

Where:
- End Value = Current/maturity asset value
- Start Value = Initial investment cost
- t = Total duration of holding in years (decimal format allowed)

4. Indian Income Tax & Capital Gains Slabs

Tax engines process progressive income brackets (slabs) by applying different tax rates sequentially.

New Tax Regime (Section 115BAC): Computes tax liabilities based on the progressive slabs updated in the Union Budget Finance Act, with standard deductions automatically factored.
Old Tax Regime: Computes tax liabilities including Chapter VI-A deductions (e.g. Section 80C, 80D) as entered by the user.
Long-Term Capital Gains (LTCG): Factored at 12.5% for equity assets (with exemptions up to ₹1.25 Lakhs per financial year) and 20% with indexation or 12.5% without indexation for debt/gold assets in accordance with latest directives.

5. Disclosures regarding rounding

To optimize performance and simplify user readability, minor values are rounded to the nearest integer. Actual banking calculations may show tiny variances depending on day count conventions (such as Actual/365 or 30/360 interest bases) and compound rounding intervals.