Question

David opened a Recurring Deposit Account in a bank and deposited Rs 300 per month for two years. If he received Rs 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) = Rs300

Number of months(n) = 24

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

$S.I.=P\times \frac{n(n+1)}{2\times 12}\times \frac{r}{100}$
$=300\times \frac{24(24+1)}{2\times 12}\times \frac{r}{100}$
$=300\times \frac{600}{24}\times \frac{r}{100}=Rs75r$

Maturity value= Rs(300 x24)+Rs(75)r

Given maturity value= Rs7,725

Then Rs (300 x24)+Rs(75)r = Rs7,725

$\Rightarrow 75r=Rs7,725-Rs7,200$

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