Edward opened a Recurring deposit account in a bank. He deposited Rs 300 per month for 2 years. At the time of maturity he received Rs 7725. What was the rate of interest?
7%
Equivalent principle for one month = Rs 300 × 24(24+1)2
= Rs 300 × 12 × 25 = Rs 90000
Interest on Rs 90000 for 1 month = Rs 90000 × 112 × r100 = Rs 75r
Total amount deposited in 24 months = Rs 24 × 300 = Rs 7200
Amount of maturity = Rs (7200 + 75r)
Or 7725 = 7200 + 75r
7725 – 7220 = 75r or r = 52575 = 7
Hence the rate of interest = 7% p.a.