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

Amount deposited per month = Rs 300
No. of installments in 2 years = 24
$\therefore EquivalentPrincipal=Rs300\left(\frac{24\times 25}{2}\right)=Rs90,000.$
Maturity value = $24\times 300+\frac{90000\times r\times 1}{100\times 12}$
$\Rightarrow 7725=7200+75r$
$\Rightarrow r=\frac{7725-7200}{72}=\frac{525}{75}=7\%$
Hence, the rate of interest is 7% p.a.