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]

Answer 1

Each subpart: 1.5 Marks

n = 2 years = 24 months, r = 6% I = Rs 120
(i) Let the monthly instalment be Rs $x$
Total amount deposited $=MI\times n=24x$
Equivalent principal $=\frac{n(n+1)}{2}\times MI$
$=\frac{\text{/}{24}^{12}\times 25}{\text{/}2}\times x=300x$
Interest $=\frac{P\times r\times 1}{100\times 12}$
$\Rightarrow 1200=\frac{300x\times 6\times 1}{100\times 12}\Rightarrow x=800$
(ii) Amount of Maturity = $24\times 800+1200$
= 19200 + 1200
= Rs 20,400