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Question

David opened a Recurring Deposit Account in a bank and deposited 300 per month for 2 yr. If he received 7725 at the time of maturity, then find the rate of interest per annum.


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Solution

Step 1: Given Data

The amount of money deposited per month, P=300,

The number of months, n=2×12=24months

The maturity value is 7725

The Maturity value is given by: P×n1+r(n+1)2400

The rate of interest is given by, r.

Step 2: Calculate the rate of interest.

Therefore, from the formula of the Maturity value, the rate of interest can be calculated as,

7725=300×241+r24+124007725=72002400+25r24007725×24007200=2400+25r25r=2575-2400r=17525r=7%

Final answer: The rate of interest is 7% per annum of the given account.


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