Question

Ahmed has a Recurring Deposit Account in a bank. He deposits Rs2,500 per month for 2 years. If he gets Rs 66,250 at the time of maturity, find
(i) The interest paid by the bank
(ii) The rate of interest.

Answer 1

Each subpart: 1.5 Marks

Monthly deposit = Rs 2,500
Time = 2 years = $2\times$ 12 months = 24 ,months
n = 24
Amount received on maturity = Rs 66,250
Amount deposited in 24 months = Rs 2,500 $\times$ 24 = 60,000
Equivalent principal for 1 month $=\frac{n(n+1)}{2}\times$ Monthly instalment
$=Rs\frac{24(24+1)\times 2,500}{2}=12\times 25\times 2,500$
$Interest=\frac{P\times R\times T}{100}=Rs\frac{12\times 25\times 2,500\times R\times 1}{100\times 12}$ = Rs 625 R ...(i)
$\therefore$ Amount maturity = Total amount deposited + Interest = 60,000 + 625 R
$\Rightarrow 66,250=60,000+625R\Rightarrow 6,250=625R\Rightarrow R=\frac{6250}{625}=10$
(i) The interest paid by the bank = $625\times 10$ = Rs 6,250 [Putting R = 10 in (i)]
(ii) The rate of interest = 10% p.a