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Question

Mohan has a recurring deposit account in a bank for 2 years at 6% p.a. simple interest. If he gets Rs 1200 as interest at the time of maturity, find :
(i) The monthly instalment
(ii) The amount of maturity
[3 Marks]

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Solution


n = 2 years = 24 months, r = 6% I = Rs 120
(i) Let the monthly instalment be Rs x
Total amount deposited =MI×n=24x
Equivalent principal =n(n+1)2×MI
=/2412×25/2×x=300x
Interest =P×r×1100×12
1200=300x×6×1100×12x=800 [1.5 Marks]

(ii) Amount of Maturity = 24×800+1200
= 19200 + 1200
= Rs 20,400 [1.5 Marks]

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