Question

Mr. Bisla has a Recurring Deposit Account for $2$ yr at $6\%$ interest per annum. He receives $₹975$ as interest on maturity. Find

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

Answer 1

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, is $P$

Time period, $$\begin{gathered} n=2\times 12 \\ =24\text{months} \end{gathered}$$

Interest on maturity $=₹975$

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

The formula for the interest is given by: $\frac{\mathbf{P}\mathbf{r}\mathbf{n}\left(n+1\right)}{\mathbf{2400}}$

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

$$\begin{gathered} 975=\frac{\left(P\times 6\times 24\right)\left(24+1\right)}{2400} \\ \Rightarrow 975=\frac{3600}{2400}P \\ \Rightarrow P=\frac{975\times 2400}{3600} \\ \Rightarrow P=₹650 \end{gathered}$$

Step 2: Calculate the maturity amount

The formula of the maturity value is, $\mathit{P}\mathbf{\times }\mathit{n}\mathbf{+}\mathbf{\text{Interest}}$

Therefore, the maturity value is:

$$\begin{gathered} \left(650\times 24\right)+975 \\ =15600+975 \\ =₹16575 \end{gathered}$$

Final answer:

The monthly instalment amount is $₹650$ and the maturity amount is $₹16575$.