Question

Edward opened a Recurring deposit account in a bank. He deposited ₹300 per month for 2 years. At the time of maturity he received ₹7725. What was the rate of interest?

• A. 7%
• B. 7.5%
• C. 8%
• D. 9.5%

Answer 1

The correct option is A

7%

Sum deposited per month = ₹300

Number of Months (n) = 2 x 12 = 24 months

Total Amount Deposited = 300 x 24 = ₹7200

Let the Rate of interest be r

Interest = P $\times$ $\frac{n\times (n+1)}{2\times 12}$ $\times$ $\frac{r}{100}$

= 300 $\times$ $\frac{24\times (24+1)}{2\times 12}$ $\times$ $\frac{r}{100}$

= 75 r

We know , Maturity Value = Total Amount Deposited + Interest

Given that Maturity Value = ₹7725

₹7725 = 7200 + 75 r

75 r = 7725 - 7200 = 525

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

r = 7%

Hence, the Rate of Interest = 7%