Question

David opened a Recurring Deposit Account in a bank and deposited Rs 300 per month for two years. If he received Rs 7725 at the time of maturity, find the rate of interest per annum.
[4 MARKS]

Answer 1

Formula:1 Mark
Steps: 2 Marks
Answer: 1 Mark

Equivalent principal for one month
= Monthly instalment $\times \frac{n(n+1)}{2}$
$=Rs300\times \frac{24(24+1)}{2}$
$=Rs300\times 12\times 25=Rs90000$
Interest on Rs 90000 for 1 month $=\frac{P\times R\times T}{100}$
$=Rs90000\times \frac{R}{100}\times \frac{1}{12}$
$=Rs75R$
Total amount deposited in 24 months $=Rs24\times 300$
$=Rs7200$
$\therefore$ Amount received on maturity
= Total amount deposited + Interset
= Rs (7200 + 75R)
$\Rightarrow 7725=7200+75R$
[Given amount received on maturity = Rs 7725]
$\Rightarrow 75R=525$
$\Rightarrow R=7$
So, the rate of interest per annum is $7\%$.