NumericalModerate3 marks
Mr. Sona has a recurring deposit account and deposits ₹ 750 per month for 2 years. If he gets ₹ 19125 at the time of maturity, find the rate of interest.
Topic: Recurring deposit / interest
Previous-year question practice database
Answer
Exam answer
Monthly deposit P = ₹750 Period = 2 years = 24 months Maturity value = ₹19,125
Total deposits:
= ₹750 × 24
= ₹18,000
Interest earned:
= ₹19,125 − ₹18,000
= ₹1,125
Recurring-deposit interest formula:
I = P × n(n + 1)/2 × r/(12 × 100)
Substituting:
1125 = 750 × 24×25/2 × r/1200
1125 = 187.5r
r = 6
Answer:
Rate of interest = 6% per annum.
Explanation
First subtract total deposits from the maturity value to find the interest earned. Then substitute the interest, monthly deposit and 24-month term in the recurring-deposit interest formula.
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