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Question

Mohan has a Recurring Deposit Account in a bank for 2 yr at 6% per annum simple interest. If he gets 1200 as interest at the time of maturity, then find

  1. the monthly instalment.
  2. the amount of maturity.

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Solution

Step 1: Write the given data and calculate the value of monthly instalment

Consider the amount deposited per month, which is same as the value of monthly instalment, as P

Time period, n=2×12=24months

Interest on maturity =1200

The rate of interest is given by, r=6%

The formula for the interest is given by: Prn(n+1)2400

Therefore, by the formula for the interest, the value of monthly instalment can be calculated as,

1200=P×6×2424+124001200=36002400PP=1200×24003600P=800

Step 2: Calculate the maturity amount

The formula of the maturity value is, P×n+Interest

Therefore, the maturity value is:

800×24+1200=19200+1200=20400

Final answer: The monthly instalment amount is 800 and the maturity amount is 20400.


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