Question

David opened a Recurring Deposit Account in a bank and deposited ₹ 300 per month for two years. If he received ₹ 7,725 at the time of maturity, find the rate of interest per annum.

• A. 10%
• B. 7%
• C. 8%
• D. None of these

Answer 1

The correct option is B

7%

Installment per month(P) = ₹ 300

Number of months(n) = 24

Let rate of interest(r)= r %p.a.

$I=P\times \frac{n(n+1)}{2\times 12}\times \frac{r}{100}$
$=300\times \frac{24(24+1)}{2\times 12}\times \frac{r}{100}$
$=300\times \frac{600}{24}\times \frac{r}{100}=₹75r$

Maturity value= ₹ (300 x24)+₹ (75)r

Given maturity value= ₹ 7,725

Then ₹ (300 x24)+₹ (75)r = ₹ 7,725

75 r = ₹ 7,725 - ₹ 7,200

r = $\frac{525}{75}$ = 7%